(Bloomberg) -- Ireland could need to complete around 52,000 new homes each year until 2050 to house the country’s growing population, according to the central bank, a figure that far exceeds current government targets of 33,000 annually.
As much as €7 billion ($7.8 billion) of additional development finance over and above existing levels would be required to fund the additional units per annum, the bank estimated in a report Wednesday. It pointed to pent-up demand for housing and an expectation that the country’s population will continue to grow over the coming decades.
“The Irish housing market has been subject to a decade of under-supply,” Central Bank of Ireland Director of Economic and Statistics Robert Kelly said. “While these challenges are part of a pattern we are seeing globally, housing output as a share of national income in Ireland has been significantly below the euro area average for quite some time.”
Almost 33,000 new dwellings were completed in 2023, according to government data. While that’s more than double the 2017 total, much more stock is needed to meet demand after the economy grew strongly in recent years. The state is expected to review its targets later this year, after a government housing commission estimated that there was a deficit of at least 212,500 residential properties two years ago.
Increasing housing supply is complicated by the fact that house building stalled in Ireland for a number of years in the aftermath of the global financial crash. Access to development finance is a key sticking point for building viability, according to the central bank. Obtaining debt and equity funding may be made more challenging by a complex planning process and low productivity in the construction sector, it said.
Lobbyists for homebuilders say an annual cap of 2% on rental increases in parts of Ireland also makes projects more difficult to finance.
There are economic costs to prolonging the imbalance between housing demand and supply, the central bank warned in its analysis.
“These amount to a higher cost of living,” the report said, “and in turn, a higher cost of doing business in Ireland, ultimately damaging competitiveness and the sustainable growth in living standards of Irish residents over the medium-term.”
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