Have we reached peak housing?
Housebuilders Glenveagh and Cairn believe market has no chance of meeting expected demand for 35,000 units
The co-founder of Glenveagh Properties this week cast doubt on whether the private sector would ever be able to deliver the 35,000 housing units necessary to meet demand in the Irish market, a notion that must have sent shivers through Government.
At a press briefing following the company’s first full-year results, Stephen Garvey said he’d be surprised if the private sector was able to deliver much more than 20,000 units a year. That is a full 40 per cent below estimated demand.
“Maybe we’re living in an era where housing will never outstrip demand,” he mused, referencing the UK’s perennial failure to deliver 300,000 units, the estimated level of housing demand there.
Garvey might have an interest in peddling such a notion – it certainly suits Glenveagh and its investors to believe they’ll be building and selling into a market that won’t ever be fully supplied.
But Garvey has a reputation as a straight shooter. And his point was reinforced a day later when the other listed housebuilder, Cairn, reported its figures. Referring to Garvey’s statement, chief executive Michael Stanley was not quite as pessimistic but said that hitting annual output of 25,000 housing units of housing would be “very optimistic”. That’s still a shortfall on expected demand of almost 30 per cent every year.
The comments of the two housebuilders raise a key question on a wider issue for the housing market here and in other countries, namely that the private market is not supplying affordable homes in the numbers required. That means a certain cohort of people appear destined to be permanently priced out of home ownership.
Rising house prices were once an electoral asset for governments as they made homeowners feel richer and more likely to reward the administration that presided over them. Now they’re a big negative, particularly for young voters.