Comment/Hubert Fitzpatrick: In any society, housing will always be an important area of public and private concern. Ireland is no exception in this regard. Indeed, because of the particular and exceptional dynamics of the economy and of Irish society in recent years, housing has been to the forefront of our national debate.
The debate has focused on such issues as social housing, cost and affordability, planning and development, supply and demand.
But little attention has been given to the extraordinary achievements of Irish housebuilders during the last 10 years. In 2003, Irish housebuilders completed 69,000 new homes.
This is an increase of 12,000 on 2002 and is the eleventh consecutive year of increased output.
In 10 years, the housebuilding industry has trebled outputs. During the same period, there has also been a significant improvement in variety, design and overall quality of new housing.
By any yardstick, the performance of the Irish housebuilding industry in recent years has been exceptional. Output of new housing in each year since 1998 has exceeded by a wide margin the most optimistic forecasts of housing supply.
The current level of housing output at 16 units per 1,000 of population is five times higher than in Britain and is three times the EU average. The National Development Plan set a target of 500,000 new homes in the period 2000-10. The industry is well on the way to exceeding this target. This compares more than favourably with every other target of the NDP.
These continuing record output levels are the most compelling evidence of all against allegations that the industry is holding back on supply or "hoarding" development land.
In 2003, some commentators alleged that the housebuilding industry was hoarding land and some publications went so far as to outline a major list of owners of zoned land, in particular areas of Dublin, where it was inferred that hoarding of development land was arising.
Clearly, when an analysis was undertaken regarding these land hoarding allegations there was no evidence whatsoever that hoarding was taking place by housing developers.
Housing developers, as is evident by current output figures, clearly wanted to bring supply to the market at the earliest date. Naturally, large housebuilders in particular must plan for a supply of development land several years in advance. Unless they make provisions for this essential component of their operation, they will rapidly go out of business.
Instead of introducing legal and constitutional constraints on building land, the IHBA strongly believes that Government policy should focus on creating a more efficient market in the supply of zoned and serviced land.
This can be most effectively done by a combination of private developers, PPPs and national and local initiatives aimed at increasing the supply of serviced land in the right areas and at the right price. Any other approach is likely to be counterproductive.
In stark contrast to other sectors of the Irish economy, particularly professional services, housebuilding is not a closed shop. There are more than 1,200 members in the Irish Home Builders Association, the representative organisation for the housing industry and a constituent body of the Construction Industry Federation.
There are no restrictions on new entrants to the industry and indeed many new builders begin operations each year.
Again unlike other sectors of the economy, housebuilders do not get Government subsidy or EU handouts. Irish housebuilders stand on their own two feet. They build houses in the open market which is a rigorous selector of success or failure.
Apart from supplying an essential product, the contribution of the housebuilding industry to the wider economy is also often overlooked.
In 2003, the value of housing output was about €14 billion. The industry contributed approximately €5.6 billion to the Exchequer in 2003. Direct employment in housebuilding is around 80,000 and of course tens of thousands of other jobs are indirectly supported by the industry.
Future demand for new housing will be influenced by a wide range of factors. These will include overall economic activity, affordability, population trends, household formation, migration, requirement for replacement dwellings, investment activity and demand for second homes including holiday homes.
Five years ago, even the most optimistic housebuilder would not have believed output would reach almost 70,000 units a year. In my opinion, supply and demand is now in broad balance. I believe housing output has peaked at present levels.
Despite the several Cassandras, I do not anticipate any collapse in demand or on price. I believe, however, that over the next three to four years supply and demand will gradually decline towards a more sustainable level of 50,000 units per annum.
Hubert Fitzpatrick is director of Irish Home Builders Association
