Tánaiste and Minister for Foreign Affairs Simon Harris has said the Government had reached a stage in housing development where supply had seen a “significant increase” in recent years, but that this has now “plateaued”, reports RTE.
His remarks come following the Central Bank’s decision to lower its projections for the number of homes expected to be built in Ireland between now and 2027.
Speaking on RTÉ’s Today with Claire Byrne, the Tánaiste stated they are working “day in day out” to regain that momentum, reports RTE.
“The commitment in the Programme for Government is clear – over 300,000 new homes by the end of 2030. That’s the north star, that’s where we have to get to. We’re making a series of decisions to try and get momentum back,” he said, reports RTE.
“I fully expect every single one of those decisions to be critiqued. Many of those decisions might be deemed unpopular. All of those decisions, looked at in isolation, will miss the point here – it’s about putting together all of the pieces of the jigsaw to be able to ramp up supply,” reports RTE.
“I’m somewhat encouraged that some of the measures we’ve taken in recent days will make a real difference,” reports RTE.
The Tánaiste stated that part of the current focus must be on obstacles that delay housing development, including planning and water infrastructure.
“Water, wastewater, energy and zoned land are some of the biggest constraints,” he said, reports RTE.
“Now is the time for big, brave, bold decisions, there’s no doubt about that. Frankly, there’s no alternative, and that’s why we made decisions this week on the Rent Pressure Zones, which are not without criticism,” reports RTE.
“The rental market in and of itself – there’s complexity to this. This isn’t about magic wand solutions, this is about actually having to look at how you take a balanced approach,” he added, reports RTE.
The Central Bank is projecting that 32,500 homes will be completed in 2024, down 1,500 from the estimate it issued last March.
It predicts that 37,500 units will be built in 2025, which is 2,500 fewer than its last forecast, and 41,500 homes in 2027, also a reduction of 2,500.
This suggests the Government is likely to fall short of its annual housing completion targets, reports RTE.
The Central Bank attributes the revised forecast to a weaker-than-expected number of completed homes in the first quarter, and a steep decline in construction starts.
The Bank also notes that its housing forecast is “subject to considerable downside risk given the current bottlenecks in housing supply and infrastructure”, reports RTE.
It identifies shortages in water and electricity connections, as well as a lack of construction workers, as major barriers to scaling up building activity.
Boosting productivity in construction is “essential to enable it to fulfil the increasing demand for housing”, the Bank says, reports RTE.
It has also revised its domestic economic growth projections for this year and next, citing the impact of new US tariffs.
Growth in modified domestic demand is now forecast at 2% this year, down 0.6 percentage points from the previous outlook.
The 2025 growth estimate is lowered by 0.4 percentage points to 2.1%, reports RTE.
While domestic growth is expected to decline, GDP projections are going up due to a spike in exports to the US ahead of new tariffs from the Trump administration.
This is mainly due to increased exports of diabetes and weight-loss medications manufactured in Ireland’s pharmaceutical sector.
Robert Kelly, the Central Bank’s Director of Economics and Statistics, said the reduced housing targets reflect a clear loss of momentum, reports RTE.
“If we look at what happened in Q1 of this year compared to last year, there was about 2% growth. You play that through to the year, you don’t break 31,000 units,” he said on RTÉ’s Morning Ireland.
“Now, we do expect it to be higher, at 32,500. But really what we’re talking about here are capacity constraints and they feature in a number of ways.”
Mr Kelly pointed to issues around infrastructure and workforce availability as key contributors to the slowdown, reports RTE.
“You could point to infrastructure and the enablers needed to deliver housing, and when we took a view of how they’d scale up with the additional needs and commencements in the system, we’re not seeing that to the same extent. So, we’re revising it down,” he said.
“We were expecting some labour to transfer from the commercial real estate sector into housing. We have seen that and that has taken place. But we’ve actually seen limited amounts of that going into new dwellings, and quite a lot of that labour going into home improvements, reports RTE.
“This is all needed, but these all reflect in our lower figures,” he added, reports RTE.
Minister for Housing James Browne acknowledged that rents may rise, but said the Government’s strategy is focused on reducing them by increasing housing availability.
Speaking on RTÉ’s Morning Ireland, he noted that recent rent-related regulations are designed to give renters greater security, reports RTE.
“Rents may go up in certain cases. I certainly hope they don’t. Our aim is to get rents down by increasing the level of supply. That’s what we need to see happen,” he said, reports RTE.
“Rents are going up at the moment anyway, especially in those areas that are not covered by Rent Pressure Zones,” reports RTE.
“The only way you can get rents down is to increase supply and that’s by having a certain system in place for tenants, for landlords and investors. The current system is clearly not working,” he added.
Mr Browne explained that tenants in newly built properties would have protections “by way of an inflationary cap”.
“Properties commencing from the date of the Government decision just over a week ago, it will certainly take some time for them to come on to the market. They will have a tenant protection by way of an inflationary cap,” he said, reports RTE.
“The 2%, if you like, that exists on current properties, we won’t apply to new properties and that’s to get the investment into the country.
“We need to go from 30,000 to 50,000 or 60,000 homes. We can’t. The Government is already delivering 50% of all homes in this country, we want to deliver more social, affordable homes. But to get those extra 20,000 or 30,000 thousand homes per year, we need the private sector and that means significant investment and how we can activate that,” he added, reports RTE.
Sinn Féin TD David Cullinane argued that rent increases are a certainty under the Government’s rent reform proposals.
“It will hurt tens of thousands of people every year,” he said in the Dáil, reports RTE.
He also called on Tánaiste Simon Harris to correct the Dáil record and clarify whether students will be protected under the new rules.
According to Mr Cullinane, the Central Bank has concluded that the changes will negatively impact renters.
Mr Harris responded that 11 counties would benefit from the Rent Pressure Zone expansion currently being approved by the Oireachtas, reports RTE.
He said the Central Bank report noted that the reforms would help boost housing supply.
He added that significant investments in water and energy infrastructure are planned next month to facilitate further homebuilding, reports RTE.
Mr Harris insisted the Government “have students’ back” and would be introducing new support measures for them in the upcoming Budget.
He also criticised Sinn Féin’s alternative policy, which would replace Rent Pressure Zones with reference rents, calling it “not a good idea,” reports RTE.
He further claimed that Sinn Féin owns the largest property portfolio in Leinster House, with as many as 40 properties.
Housing department to require additional funding, officials say
Meanwhile, officials in the Department of Housing told TDs that more funding will be needed beyond the €715 million already allocated by Government earlier this year, reports RTE.
At a Public Accounts Committee hearing, senior official Paul Benson stated: “We have made Government aware additional funding will be required.
“But it is not required immediately. It is required later in the year,” reports RTE.
He said the Government “recognises that there are funding challenges arising from the last NDP (National Development Plan)”.
He was responding to a question from Fianna Fáil TD Séamus McGrath, reports RTE.
When asked if funding issues were causing project delays, Mr Benson replied:
“No, we are approving every day.”
“There are a couple of held up for other reasons and nothing to do with funding,” reports RTE.
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