The good news first. After several dormant years, the supply of new homes is finally ramping up. The latest figures from the Central Statistics Office (CSO) show that 4,419 new dwellings were completed in second quarter of this year. That's 34 per cent more than in the same period last year and it means we're on course to see roughly 18,000 homes added to the State's property-starved market in 2018.
Now for the reality check: this is still nowhere near the estimated level of demand in the market – put at 30,000-35,000 – and nowhere near the level needed to halt the rampant inflation in the sector that is pricing so many out of the market while delivering bumper profits for property firms and investors. Last year, Ires Reit, the State's largest private landlord, saw profits jump nearly 40 per cent to €65 million, while its founder, David Ehrlich, recently pocketed €4 million from the sale of shares in the company.
Unsurprisingly, the greater Dublin area is commanding the lion’s share of the new housing output, accounting for 61 per cent of new dwellings in the second quarter. Sixteen of the top 20 areas with the most completions are in greater Dublin. This is largely a function of the selling prices in many areas of the State still being below the cost of delivery, Goodbody economist Dermot O’Leary said.
The figures do show a welcome shift away from one-off housing, an issue that has bedevilled planners here and lies at the root of so many of the State’s problems, including the current broadband debacle. Single dwellings accounted for 26 per cent of newly built homes in the second quarter, the lowest level since 2011.
Worryingly, however, apartment construction rose by only 3 per cent, which is modest in the context of current demand, and undoubtedly reflects uncertainty surrounding building regulations.
The CSO’s “new dwelling completions” index, published for the first time in June, replaces Government figures, which were based on electricity connections and inflated the true level of supply.
Dublin architect Mel Reynolds takes a more jaundiced view of the housing market, noting that stamp duty returns for the first six months of 2018 point to a fall-off in purchasing activity, particularly in the existing home category.
This appears to run counter to the dominant narrative that there is strong sales demand for housing across the economy.
Reynolds believes we should be seeing 80,000-90,000 home sales a year on the basis of market size and population. The figure for 2018 is likely to be closer to 50,000.
“Demand isn’t as pronounced as some make out, and has got some way to go before normalising,” he says, highlighting the lack of available credit as the chief barrier for most people.