Population to drive demand for 34,000 new homes
As many as 34,000 new homes will need to be built each year through the next decade to meet a growing population boosted by inward migration, Central Bank research has revealed.
And even if inward migration falls back, as many as 23,000 new homes a year will be required to meet demand, according to Thomas Conefrey and David Staunton in ‘Population Change and Housing Demand in Ireland’.
Homebuilders have acknowledged for some time it will be many years before the industry comes anywhere near to meeting pent-up demand for housing. And economists point to the continuing soaring level of rents — which have continued to climb by over 5% this year — even as house price inflation slows following many years of huge price gains.
“Recent observed levels of residential completions are well below both current and future estimated demand, implying a need for further expansion in the supply of new dwellings,” the Central Bank researchers said.
“With the economy currently at an advanced stage of the business cycle, further increases in housing investment would have macroeconomic and labour market implications,” they said.
The Central Bank estimates to keep up with trends in so-called household formation, around 27,000 new units a year were needed between 2011-2019.
Amid the high level of uncertainty over future migration and population growth, the researchers presented two new home targets. Under one scenario of high migration, they estimate demand for new homes of 33,000 a year from 2020 to 2039 and then 26,000 a year from 2040 to 2051.
And even under a scenario low inward migration, 23,000 units a year will be required to meet demand.
“The housing demand estimates are sensitive to the projected change in the population. In particular, there is uncertainty over the scale of future net migration flows and in recent years net inward migration has been higher than in the CSO projections,” they said.
And they said that “a continuation of this trend would result in additional demand for housing in excess of the estimates presented” in their research.
