2025 BEFORE HOUSING TARGETS CAN BE MET

Bombshell analysis admits this Government won’t be able to build 33,000 homes a year

THE Government has been given a dire official warning that the housing crisis will not begin to get better until at least 2025, the Irish Mail on Sunday can reveal.

An internal analysis has told the Covid Coalition chiefs that they’ll have to change tack significantly from their current housing policies to even make that deadline.

In a bombshell document prepared for the Cabinet’s Housing sub-committee, the Taoiseach, Tánaiste and Housing Minister have been told of significant obstacles they will face in meeting their housing commitments including that:

Demand-side policies – such as grants for prospective homeowners – will create house price inflation;

A lack of builders, manpower and materials to build houses will limit the economy’s ability to build;

The Government needs to activate

building sites that already have planning permission to allow extra homes to come onstream.

Despite this, Tánaiste Leo Varadkar pledged to the Fine Gael Ard Fheis last night that the Government would set a new target of 40,000 homes – and hope to reach 70% home ownership by the end of this decade. This would be a doubling of what is being built now.

The internal warning comes as respondents to an Ireland Thinks/ Irish Mail on Sunday poll this weekend said they have little faith in Housing Minister Darragh O’Brien.

Those polled gave the beleaguered Fianna Fáil minister an approval rating of just 2.8 out of 10.

The internal analysis document, prepared for the powerful Cabinet Housing Committee has said that, based on current trends, the Government will not reach its objective to build 33,000 houses a year by 2025, the end of its political life.

The figure of 33,000 is the minimum build required to maintain any degree of balance between supply and demand in the housing market.

The current Government housing policy, Housing for All, aims to achieve an average of 33,000 new housing units per year on average over the next decade, with the overall objective being to hit the 33,000 target in 2025.

The State is expected to build about 15,000 new housing units this year, down from 20,000 last year.

But the analysis, seen by the Cabinet Housing Committee, concedes that the impact of Covid-19 means that the 33,000, target, will not be met on current trends.

The analysis also warns that for the current targets to be met, significant new measures are required.

The committee’s membership comprises the Taoiseach, the Tánaiste, the Environment Minister, the Housing Minister, the Finance Minister, the Public Affairs Minister and the Social Protection Minister.

The Cabinet committee was also given a stark warning about the imminent danger posed by demand-led housing inflation, sparked by the release of Ireland’s record level of savings.

The Department of Finance believes that 60% of the Covid-19 ‘savings piggybank’ of €12bn will be spent, and if the housing portion is spent on investment in house purchasing rather than house building, inflation is a clear risk.

The briefing raises concerns over the demand-led schemes favoured by Mr O’Brien, such as the firsttime buyers’ grant.

One senior political source warned: ‘We are entering the classic first phase of bubble economics. We may in fact have exited it and moved on to phase two.’

The internal analysis details a number of other key problems affecting the Government’s capacity to reach its targets.

These include capacity where the Government is being asked how it will secure the required 80,000 builders needed to build 33,000 new units each year.

The committee was also warned about the acute nature of the affordability challenge in Dublin and other urban areas, where the average price of a new home is €400,000.

This, the committee was told, would require a household income of more than €100,000 in a state where the average national income is €49,000.

The committee was also told that average rents in Dublin, often more than €2,000 a month, require a €70,000 net income to be affordable.

And the committee was also warned that land and site hoarding is an escalating problem that could be turned into an opportunity.

The most recent estimates indicate that 80,000 units across the country have been granted planning permission, but not started building, over the last five years, with 40,000 being located in Dublin.

However, were 5,000 of these units activated each year, the 33,000 annual housing target would be reached in 2024.

The committee was also told that the politically unpopular construction of high-density apartments for sale in cities must be made viable.

On top of the 33,000 new units, the Government was also told there is a requirement for actions to reduce vacancy levels in towns and urban areas in above-the-shop units and the under-utilisation of existing housing stock where down-trading to smaller units is possible.

It is thought the internal analysis document claims that over 90,000 vacant or under-utilised homes could be released in a decade.

Unease is also likely to grow among rural TDs over the paucity of house building envisaged for the countryside.

The current plan, when it comes to the 33,000 target, is to construct 11,800 private homes and 6,500 rental properties.

A total of 4,100 affordable houses and 10,300 social housing units are also expected to be required each year.

The total investment between public and private investment will be €12bn.

However, the plan to locate 50% of new housing in Dublin, Cork, Limerick, Galway, Waterford and 30% in urban locations means just over 6,000 houses per annum

‘We’re in the first phase of bubble economics’

will be built in rural Ireland.

The high-powered Cabinet committee also received stark analysis of the current level of shortfall in urban construction of 4,000 a year in Dublin and 3,000 in other regional cities.

The committee also received an impressive list of actions that are needed apart from construction.

These are believed to include: securing greater public acceptance for planning; reforming the judicial review process; developing strategic land assembly through the Land Development Agency; delivering a plan rather than a developer-led system, and greater efficiencies in the planning and the legal system.

One senior source said: ‘There were a fair few grey faces in the Cabinet committee when that list was read out. Darragh O’Brien has his work cut out for him with that list.’

Separately, several ministers have berated the ESRI over its recent claim that government spending should be doubled to €4bn to ease the housing crisis.

In an indication of the current political sensitivity of housing, one Cabinet member said their suggestion was: ‘Naive and not grounded in the realities of the market.’

They said: ‘The ESRI is missing the point – borrowing to build houses is absolutely the least of our problems.’

Echoing the view of the internal analysis received by the housing committee they said: ‘They are barking at the wrong dog. Money is being thrown at housing right, left and centre. The problem is not resources, the problem is we don’t have the people to build them, we don’t have boots on the ground.’

Despite this context, the MoS poll also found that a massive 79% of respondents thought the housing crisis could be solved.

The poll also found that a large minority of 41% was in favour of keeping the property tax, although 52% agreed with Sinn Féin proposals to have it abolished.

‘We don’t have the people to build them’