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'Decade of housing supply problems' lies ahead if State doesn't double its investment, ESRI warns

The State must double its spending on housing in order to meet demand and stop prices rising, the...
Stephen McNeice
Stephen McNeice

08.02 3 Jun 2021


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'Decade of housing supply prob...

'Decade of housing supply problems' lies ahead if State doesn't double its investment, ESRI warns

Stephen McNeice
Stephen McNeice

08.02 3 Jun 2021


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The State must double its spending on housing in order to meet demand and stop prices rising, the ESRI has warned.

The Government currently spends around €2 billion every year, delivering around 9,000 new homes.

However, the think-tank says that should be increased to €4 billion, which would deliver about 18,000 new homes a year.

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It warns that failure to address the supply issue could lead to another decade of rising house prices and rents.

The ESRI paper recommends 'sustained but prudent' borrowing would allow the State to ramp up its investment in housing in a sustainable manner.

Kieran McQuinn, Research Professor with the ESRI, told Newstalk Breakfast that it's been known for a long time now that the Irish property market has a major problem in terms of supply.

He said: "We would estimate the demand for housing is somewhere in the region of 35,000 units per annum. We’ve been building between 15,000 and 20,000 units over the last number of years.

"Unfortunately, COVID-19 has had quite a negative impact on the supply side… the imbalance between supply and demand is now likely to be exasperated.”

He suggested the private sector is “almost incapable” of scaling up to meet the necessary demand.

Therefore the Government needs to double their annual spending from €2 billion to €4 billion, with the aim of building 17,000 to 18,000 homes.

He said there's "no doubt" that scaling up will also result in additional demand for construction workers.

Professor McQuinn said previous house-building levels, pre-crash, were unsustainable - but argued it’s very possible to reach the level that’s now needed.

He said: “Unless we address the supply side… unfortunately we’re going to see continued inflationary pressure coming from housing for the next five, six, seven years.”

The Government has insisted that housing is its 'number one priority'.

However, they've faced major criticism for their approach so far - with many housing experts and opposition parties the measures and programmes they've implemented do not go far enough.

Main image: File photo. Picture by: Eamonn Farrell/RollingNews.ie

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