State urged to build houses, not buy properties

State efforts to combat the social housing shortage by buying and leasing properties run the risk of squeezing some purchasers out of the market, one property expert said on Friday.

Annette Hughes of DKM Economic Consultants said the State needed to "get out and build" rather than spending money on acquiring properties in an effort to tackle the shortage in social housing.

“They are leasing and acquiring the very properties that the private market wants to buy, they need to add to stock,” she said. Ms Hughes added that there was a risk that those trying to buy homes could find themselves bidding against the State.

Part of the Government plan to deal with the crisis involves giving money to councils to acquire homes for social housing along with building new homes.

Ms Hughes, whose firm provides the Department of the Environment with an annual report on the construction industry, argued that building plans should be brought forward as soon as possible.

Difficult challenge

Speaking before addressing the

Euroconstruct

Annual Conference in Dublin yesterday, she acknowledged that the overall housing shortage presents the State with a difficult challenge.

The Republic needs about 37,500 new homes every year through to 2018. However, at current rates, just 11,000 will be built this year, 15,000 in 2017 and 20,000 in 2018, less than half the demand.

Ms Hughes said this showed there was a clear need to step up house building.

DKM estimates construction will be worth €14.4 billion to the economy this year, 14 per cent more than the €12 billion it generated in 2015.

It is likely to beat this year’s performance in 2017, when the economics firm estimates the industry will expand by 17 per cent. The increase will slip back to 7.4 per cent in 2018.

Fastest growth in Europe

On that basis, Irish construction growth will be the fastest in Europe.

Poland

, which expects a 5.8 per cent expansion and

Finland

, where growth is likely to be 5.3 per cent, are the next nearest.

“These strong growth rates reflect an industry that has been in recession for six years until 2014 and needs to catch up with an economy that has expanded by almost 20 per cent in the meantime,” Ms Hughes said.

The commercial sector is the strongest performer. Councils gave planning permission for 1.822 million square metres of non-residential buildings last year, 70 per cent more than in 2014.

However, political promises could mean the Government will have to divert money from capital projects to cover day-to-day spending, Ms Hughes suggested.