Tánaiste and Minister for Foreign Affairs Simon Harris has said that while housing supply has seen a “significant increase” in recent years, progress has now “plateaued”, reports RTE.
His comments come as the Central Bank has lowered its forecast for the number of new homes to be built in Ireland between now and 2027.
During an appearance on RTÉ’s Today with Claire Byrne, the Tánaiste said they are working “day in day out” to rebuild that progress, 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. I’m somewhat encouraged that some of the measures we’ve taken in recent days will make a real difference,” reports RTE.
The Tánaiste highlighted that overcoming barriers to faster homebuilding, such as the planning process and utilities infrastructure, must now be a priority.
“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 now predicts that 32,500 homes will be finished this year, a decrease of 1,500 from its previous estimate in March.
It forecasts 37,500 completions in 2025, down 2,500, and 41,500 in 2027, also down by 2,500.
This revised outlook suggests the Government may fall short of its annual housing targets, reports RTE.
The Central Bank says the lowered forecast reflects underperformance in completions during the first quarter of the year and a sharp decline in housing starts.
The Bank warned the housing forecast faces “considerable downside risk given the current bottlenecks in housing supply and infrastructure,” reports RTE.
It cited limited access to water and power connections and a shortage of construction labour as key obstacles to scaling up housing delivery.
Improving productivity in the sector is described as “essential to enable it to fulfil the increasing demand for housing”, reports RTE.
The Central Bank has also downgraded its projections for domestic economic growth this year and next due to US-imposed tariffs.
Growth, measured through modified domestic demand, is now expected to be 2% in 2024, a reduction of 0.6 percentage points, reports RTE.
Its 2025 growth forecast has also been revised down, dropping 0.4 percentage points to 2.1%.
While the domestic forecast is weaker, the GDP projection has been increased, driven by a spike in exports to the US in advance of new tariffs from the Trump administration.
This increase is largely attributed to a surge in exports of weight-loss and diabetes medications made by Ireland’s pharmaceutical sector, reports RTE.
Robert Kelly, Director of Economics and Statistics at the Central Bank, said the revised housing projections are mainly due to reduced momentum.
“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,” reports RTE.
Mr Kelly pointed to both infrastructure and labour issues as key factors slowing down the pace of homebuilding.
“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, reports RTE.
“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. 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 stressed that the Government’s focus is on lowering them by boosting supply.
Speaking on RTÉ’s Morning Ireland, he said new rent regulations are intended to offer greater protections for tenants, 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. 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, reports RTE.
Mr Browne explained that tenants in new housing developments would be protected through a cap linked to inflation.
“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,” reports RTE.
“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 said the Government’s rent reforms will undoubtedly lead to rising rents.
“It will hurt tens of thousands of people every year,” he told the Dáil, reports RTE.
He also called on Tánaiste Simon Harris to clarify whether students are excluded from the new protections.
Mr Cullinane said the Central Bank has concluded the reforms will negatively affect renters.
Mr Harris responded by saying that 11 counties stand to benefit from the expansion of Rent Pressure Zones, due to be enacted by the Oireachtas this week.
He also noted that the Central Bank report found the rent changes would help increase housing supply.
He said additional investment in energy and water infrastructure to support more housing construction will be announced next month, reports RTE.
Mr Harris insisted the Government was standing behind students and would announce further measures for them in the upcoming Budget.
He argued that Sinn Féin’s policy to eliminate Rent Pressure Zones and use reference rents instead was “not a good idea,” reports RTE.
He further claimed that Sinn Féin was “the biggest property owners in Leinster House,” with an alleged property portfolio of up to 40 units.
Separately, housing department officials informed politicians that they will need more funding, beyond the €715 million allocated earlier this year, reports RTE.
At a Public Accounts Committee hearing, senior official Paul Benson said: “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 stated that Government is aware of budget challenges arising from the last National Development Plan (NDP).
He was answering questions from Fianna Fáil TD Séamus McGrath.
When asked whether any projects were delayed due to funding issues, Mr Benson responded:
“No, we are approving every day,” said Mr Benson, reports RTE.
“There are a couple of held up for other reasons and nothing to do with funding”, reports RTE.
Tell us your thoughts in the Facebook post and share this with your friends.
