Property consultants Mitchell McDermott have just dropped an ice bucket on the Government’s housing narrative.
The company’s latest report on the construction sector here suggests housing delivery has stagnated well below government targets and will fail to reach the 33,000 level achieved in 2023 (a post-crash high) for at least another three years.
As a result the Government, despite a plethora of promises and assertions that it had decisively moved the dial on housing, now has “little chance” of achieving its plan to build 300,000 new homes by 2030, the report said.
The projections will not make good reading for newly installed Minister for Housing James Browne, who now finds himself in the hottest ministerial seat of the fledgling administration.
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One of the report’s authors, Paul Mitchell, says developers rushing to meet deadlines for Government waivers on development levies and with rebates on water charges artificially pumped the level of housing commencements last year, generating what he described as “a misleading narrative” that essentially supply had been turbocharged. In reality it was a once-off blip.
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The other big theme is the fall-off in apartment construction, which fell from 12,000 units to 9,000 last year and which is expected to fall again this year. Foreign funds had been financing the State’s apartment boom, but higher interest rates have stalled that trend.
To make it more attractive for funds, the report recommends adjusting the current rental-cap regime, applying it to tenancies rather than buildings, a move that could be, if undertaken, politically divisive given the existing pressure on renters.
Mitchell McDermott’s analysis suggests new home completions could be as low as 32,000 units this year, following 30,000 last year, and against a recent Central Bank prediction that housing supply would lift to 37,500, 41,000 and 43,500 units this year, next year and 2027 respectively.
At the time of the election, Simon Harris, then taoiseach, promised delivery would rose to 40,000 units in 2024, nearly 10,000 above the actual out-turn.
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