Housing targets 17,000 short of our ‘actual need’
THE State needs to build an extra 17,000 homes every year but officials in the Department of Finance warned it will be ‘difficult’ to maintain current levels of construction.
There were 32,695 new homes built last year, an increase of 2,969 on the previous year, surpassing the 29,000 targeted in the Government’s Housing For All plan.
However, officials in the Department said housing targets are ‘significantly below the actual need’ and moving beyond the current level of housing delivery will be challenging.
Officials reiterated to Finance Minister Michael McGrath that housing delivery needs ‘to be closer to 50,000’ a year, which this newspaper first revealed more than a year ago.
An internal housing update prepared for Mr McGrath, obtained by this newspaper, warns that sustaining the billions of euro provided in State interventions to stimulate home building in the long-term is ‘questionable’.
Under Housing for All, the Government’s blueprint for solving the housing crisis, an average of 33,000 new homes will be delivered each year. But they are based
€200,000 is the total developers can get per home under STAR
on 2016 Census data and do not account for the surge in population from 4.7million people to more than 5.1million now.
A formal revision of the housing targets by the Economic Social and Research Institute (ESRI) are due to be published in the coming months.
The revised targets have been repeatedly delayed, with Taoiseach Leo Varadkar downplaying the level of increase, saying they will be in line with what can be achieved, not the level of ‘need’.
The officials warned that while overall momentum in housing output is ‘relatively positive’, it is unlikely to be sustained.
They wrote: ‘Continuing this momentum over the medium to long-term may prove difficult. The rise in commencements of apartments is positive, however, viability challenges in highdensity housing remain acute.’
They also questioned the sustainability of multi-billion euro subsidies for developers introduced to reduce the cost burden on them to build homes.
The Government introduced a range of schemes to incentivise home building, such as Croí Cónaithe Cities, which bridges the viability gap for developers building apartments, giving them up to €144,000 for every unit.
The Secure Tenancy Affordable Rental (STAR) investment scheme allows developers to receive up to €200,000 per unit from the Government if they designate the homes as cost rental for a minimum of 50 years.
The Government waived development levies and water connection fees, which can amount to €26,000 per home, until 2025.
The officials wrote: ‘The State has stepped in via various schemes but the long-term sustainability of such an approach is questionable.’
The memo is at odds with claims by senior figures in Cabinet.
Speaking on RTÉ in March last year, ahead of a Sinn Féin motion calling for the eviction ban to be extended, Tánaiste Micheál Martin said the State had ‘turned a corner’ on housing. Housing Minister Darragh O’Brien said in January last year that ‘the plan is robust, it is taking hold and we’ve turned the corner on housing’.
A spokeswoman for Mr O’Brien last night reiterated his belief that ‘we have turned the corner on what was a decade of undersupply in housing… Every effort is concentrated on keeping this momentum going and the pipeline is very strong’.
Sinn Féin housing spokesman Eoin Ó Broin said: ‘It [the memo] undermines their claim that what has happened last year [increased levels of building] is beginning to bridge the gap between [housing] need and supply but highlights significant headwinds about sustainability of Government funded initiatives.’
He described the document as being ‘very honest’ which he said was in ‘stark contrast to the Tánaiste and Housing Minister’.
Mr Ó Broin added that he was disappointed it did not provide an update on homelessness, or the State’s social and affordable housing output.
Latest figures show there are currently 13,531 people in homeless emergency accommodation.
A Housing Department spokesman told this newspaper that Mr O’Brien is ‘fully committed to the interventions implemented to stimulate development’.
He said: ‘Through modelling undertaken by the Department of Finance, it is estimated that €13.5billion of development funding per annum, comprising both debt and equity, is required to deliver an average of 33,000 homes per year.
‘The Government are investing heavily but it’s clear that significant funding is still required from private capital sources.
‘Without investment, activity in the housing market would be much reduced and would increase the significant pressure already facing renters and prospective homeowners.’
Separately, internal briefing documents prepared for Public Expenditure Minister Paschal Donohoe in September, obtained by the Mail, caution the State’s ability to drastically ramp up housing delivery in line with housing demand.
‘We’ve turned a corner on housing’