Number of new home completions is growing – but too slowly
Cantillon: Some 12,500 new properties have been completed this year, well below what the State needs to meet demand
The fact that supply is such a distance from demand means there’s little prospect of affordability improving any time soon. Photograph: Istock
Prospective homebuyers will hardly be dancing in the street about the news that the volume of new home completions is continuing to increase by double-digit percentages.
Even though the number of new completions rose by 23 per cent in the third quarter, that’s a lower rate of increase than in the previous two. In total, some 12,500 new properties have been completed this year, a figure that is well below what the State needs to service the existing demand.
It’s also worth noting that the headline figure disguises the real level of available properties.
Firstly, all of these new homes haven’t been or won’t be on sale to the general public. Of the new properties, more than a quarter are known as “single homes”. These are effectively one-off houses, the majority of which are unlikely to trouble the housing market any time soon, if ever.
Then there’s the woefully low level of apartment construction – only 1,624 were built in the first nine months of the year, or 13 per cent of the total new properties. This comes despite recommendations from a raft of experts that building up is the way for Dublin to address its chronic housing shortage.
Even with that low level of apartment construction, they’re not exactly guaranteed to flood the market either, what with the ever-growing trend of institutional investors buying fully completed apartment blocks.
Although Davy economist Conall MacCoille suggests apartment construction will rapidly increase considering the “surge of planning permissions in recent years”, that’ll mean precious little to those shelling out high rents while trying to save for a deposit.
The other problem is that house prices are still rapidly increasing. Even though the rate of increase has dropped relatively significantly, the fact that supply is such a distance from demand means there’s little prospect of affordability improving any time soon.
This is an unquestionably grim picture – particularly for first-time buyers hoping to get out of the private rental sector. And while the numbers are going in the right direction, the pace of their movements leaves a lot to be desired.