Pinnacle Public Affairs Viewpoint – Housing
Currently in Ireland housing is one of the most emotive and political issues. It dominates the national and local media agendas on a consistent basis. This focus can be on a variety of topics such as –
- Renters rights/bad landlords
- Private developers
- Cost of housing
- Availability of credit
- Lack of Social Housing provision
The current situation is still, largely as a consequence of the credit bubble of 2002-2006; and the subsequent economic crash. The construction sector was largely decimated with employment in the sector falling to just 80,000 people in 2013. In the years between 2006 and 2010, the number of employed bricklayers fell by nearly 82%, the number of labourers by more than 78%. Employment of plasterers was down by 71%, architects by 61%.
The total number of new dwellings completed in 2013 was just 4,575.
The following year the government launched a specific policy strategy to rebuild the construction sector in Ireland. The Construction 2020 Strategy aimed to build a sustainable construction sector.
This strategy coupled with the economic recovery over the course of the last number of years has seen an improvement in the Irish construction sector, (see table below on housing delivery and employment); however supply still lags behind demand. The recent progress in the sector has been halted by Covid-19.
|Construction Sector Overview|
|Year||Housing Delivery||No of Persons in Employment|
|2020 (Up to Q3)||13,335||136,700|
In March 2020, with the outbreak of Covid-19 the construction sector like the rest of the Irish economy was shut on public health grounds. This led to the total cessation of construction activity in Ireland, except for emergency works.
The peak of economic problem for the sector can be evidenced from the fact that on 05th May 2020 79,300 construction workers (55% of employment in the sector) were in receipt of a new emergency social welfare payment; known as, the Pandemic Unemployment Payment.
As the Irish economy reopened towards the end of Q2 and beginning of Q3 2020, the number of people returning to work increased in the sector. However, they did so, having to adhere new workplace guidelines, in particular with adherence to social distancing.
This meant that construction output while increasing was slow. The number of new dwelling completions are down just under 10% from the same period in 2019.
Annual demand for new housing is more than 30,000 units per annum. Supply has failed to meet demand for the best part of a decade. This will continue to be the case for the next number of years.
The impact of this on house prices, will not be too great, as there are now strict lending regulations from the Central Bank of Ireland; that has assisted in placing a ceiling on the housing market. The purpose of these rules is to ensure there is a limited chance of a return to a ‘boom and bust’ housing cycle.
Covid-19 restrictions were re-imposed in Ireland in Oct 2020. However, construction workers were listed as essential workers. The sector has not been as impacted as it was during the first round of restrictions.
It is expected, as demand remains strong for all types of new housing in Ireland; that the sector will recover quickly and housing output will continue to expand, although there may be some ‘lag’ effects of Covid-19 throughout 2021.
Pent up demand is expanding and will continue to need to be addressed. Ultimately, supply is the solution for the problems housing is causing and this will give some certainty to investors in years to come.