Forecasting how many homes will have to be built each year to keep up with demand is fast becoming one of the hardest jobs for economists out there.
The latest report to land on The Irish Times business desk came from Davy Stockbrokers on Wednesday. It reckons the State needs 93,000 homes a year to keep up with demand if the population is to hit six million by 2031. That would keep Ireland in the long-term range of 0.55 homes per person, according to the broker.
It’s a sign of a prosperous society that there is such demand for housing, but it is also a sign of dysfunction that the State is so far behind on its existing housing targets that the targets keep rising.
Last year about 30,000 homes were completed, a figure that Davy describes as “disappointing”.
But if you had told the Economic and Social Research Institute (ESRI) think tank a decade ago that there would be 30,000 new homes a year in the State by 2024, the news may have been celebrated. That’s because in 2015 the ESRI was warning Ireland would need 25,000 homes a year to alleviate its housing crisis.
In 2020, Micheál Martin, Taoiseach then as now, was quoted saying 25,000 homes would be built in 2021. By then, the ESRI’s target had increased to 28,000 a year. Last July, the think tank had upped its estimates again to between 35,000 and 53,000 new homes a year depending on population projections.
The programme for government published last month proposed a target of 300,000 new homes over the next six years – an average of 50,000 a year. In a research note at that time, Davy pointed out that target fell below its own estimate of 85,000 new homes a year being required to keep up with demand. That has now risen to 93,000.
None of this is a criticism of any organisation’s ability to forecast housing needs. Davy and ESRI are just two of many to publicise housing targets that keep being revised upwards. Like most economic forecasts, many of the factors that feed into these calculations are dynamic and changing from month to month.
But the moving target underlines how difficult it is to estimate housing need, and by extension to solve a housing shortage that has been going on for more than a decade, with no end in sight.
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