The State needs to build more than half a million homes over the next 15 years to resolve the housing crisis, the country’s leading estate agent has said.
Sherry FitzGerald said demand for housing was being driven primarily by demographic trends.
The Republic’s population is expected to increase from 4.8 million in 2016 to 5.8 million in 2036.
“This equates to over a million more people in the State and demand for approximately 37,000 residential units per annum out to 2036,” the company said in its latest review of the Irish property market. This equates to 555,000 additional homes over 15 years.
The company also calculated that “latent” demand in the market – the number of households whose demand for homes has not been met due to the lack of supply – now stood at approximately 117,000.
The Government is finalising a new housing strategy, which will target an average of 33,000 units a year over the next decade.
"Ireland has consistently failed to meet the housing demand of its population due to prolonged inadequacies in the supply of new housing," Sherry FitzGerald said.
“This has been a consistent point of contention for the public, media and politicians and is the fundamental reason we now have a national housing emergency,” it said.
While house completions are forecast to reach approximately 20,000 units this year, presuming they are no further restrictions imposed on construction, supply was not anticipated to reach demand levels for several years, placing further upward pressure on prices, it said.
The company said it expected house prices to rise by approximately 5 per cent this year with pent-up demand linked to the pandemic continuing to accelerate activity.
The notable momentum in transaction activity seen at the end of last year continued into the opening quarter of 2021, with almost 12,000 home sales recorded on the Property Price Register (PPR) in the three-month period, it said.
Managing director Marian Finnegan said while sales were growing in nearly all price categories, the pick-up was most pronounced at the top end of the market with sales of properties worth €800,000 or more up almost 30 per cent.
Ms Finnegan said the increase reflected higher savings but "also a bounce for this end of the market following a lull period due to Brexit uncertainty".
She said the market for prime properties in Ireland in 2017, 2018 and 2019 was largely dead as households put off investing because of Brexit, “but since those fears have been put to one side we’ve seen a big pick-up in activity”.
“There is definitely a big focus on prime properties . . . be it country homes or your red bricks in Dublin 6 or your lovely coastal properties. Those properties are selling very well, and for cash in the main,” she said.
One of the other themes highlighted in the report is the exit of smaller landlords or investors.
“There continues to be a substantial mismatch between the volume of investors entering and exiting the market,” Sherry FitzGerald said, noting that approximately 29 per cent of vendors were investors selling a property, whereas just 14 per cent of purchasers were investors buying a property.