The Irish Times view on housing demand: Running out of builders

There is a danger of another housing boom with the overall stock of credit rising despite the Central Bank’s borrowing restrictions

While the number of new homes being built has risen significantly it still remains well short of the level required to meet annual demand. Photograph: Artur Widak/NurPhoto via Getty Images

While the number of new homes being built has risen significantly it still remains well short of the level required to meet annual demand. Photograph: Artur Widak/NurPhoto via Getty Images

 

The study by the Economic and Social Research Institute (ESRI) which shows that Ireland will need an influx of foreign workers to meet the State’s housing needs poses a serious challenge for policy makers.

The ESRI conceded that the level of immigration required by the construction industry will add to the rental pressures in a market where rents are already excessive and will also add to the demand for new housing.

Figures published by the Central Statistics Office (CSO) this week show there has been a 14 per cent jump in the number of people working in the construction industry in the past year. The sector has added 17,900 jobs over the past 12 months and now employs 146,500 people. At the peak of the boom in 2007, employment in construction was in excess of 233,000.

Although the number of new homes being built has risen significantly, it still remains well short of the level required to meet annual demand. There is clearly a substantial shortage of workers available for construction and there appears to be no alternative to bringing in workers from abroad.

The Department of Housing has compiled a “watch list” of projects totalling more than 2,000 homes which it said it is “absolutely essential” councils complete by year-end. Photograph: Alan Betson/The Irish Times
"There must be questions about the effectiveness and reach of the apprenticeship and retraining programmes that are available to people who could work in construction. File photograph: Alan Betson/The Irish Times

However, attention also needs to be given to ways of encouraging more Irish people into the construction industry. The CSO Labour Force Survey showed that while employment in the Irish economy hit a record high of 2.27 million in the third quarter of 2018, employment and participation rates are still below pre-crash levels.

There is no escaping the fact that more workers from abroad will be needed if the State is to meet its targets

One of the features of the Irish labour force through the Celtic Tiger years and now again is a lower participation rate in employment than applies in other developed economies. This raises questions about the interaction of the tax and welfare systems and potential disincentives to paid employment. There must also be questions about the effectiveness and reach of the apprenticeship and retraining programmes that are available to people who could work in construction.

There is also the danger of another housing boom with the overall stock of credit rising despite the Central Bank’s borrowing restrictions. This danger was highlighted yesterday by the Organisation for Economic Co-operation and Development, which said rising property prices were becoming a concern for competitiveness and for housing affordability for low-income households.

Still, there is no escaping the fact that more workers from abroad will be needed if the State is to meet its targets and fulfill the expectations of the electorate for the provision of more affordable housing.

The relatively sudden emergence of large-scale immigration over the past two decades has not led to any serious tensions between long-term residents and newcomers. Hopefully that will continue as more foreign workers arrive in the coming years to ensure that the labour force is in a position to fulfill the demand for more housing.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.