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Why Ireland’s official housing targets are (probably) way off the mark

The way the Government comes up with its targets may not hold up well under scrutiny.

IF THERE’S ONE thing the government loves, its targets. Jobs targets. Growth targets. But lately, housing targets take the biscuit.

Understandable, when thousands of potential voters are disenfranchised and stuck living with their parents due to years of surging prices.

That’s why the new housing completions target one of the most important, one that cuts to the heart of possibly finally solving the housing crisis.

Most experts agree that supply and demand are out of sync. So logically, you have to focus on getting lots of new housing supply.

It’s the centre of the government’s ‘Housing for All’ plan, published in 2021.

It aims to increase the number of new homes being built to an average of 33,000 per year between 2022 and 2030, in the hope that this eventually makes property more affordable.

But there is a big problem with the housing targets – before we even begin, we’re starting at the wrong place.

And if the housing targets are wrong, it means the government’s key response to the housing crisis could go wrong too.

A recently published report, commissioned by Fianna Fáil MEP Barry Andrews and carried out by Brussels-based group Housing Europe, lays out a critical piece of the puzzle.

Looking at the period between 2011 and 2022, it estimates Ireland should have built 345,000 homes to meet demand.

Instead, just 163,000 were delivered – leaving a shortfall of 182,000.

This matches up with estimates from the Central Bank. In a report published in 2019, the organisation said Ireland should have built about 27,000 homes a year to meet demand. But what we actually built was an average of 10,500 homes per year, leaving a big gap which has been growing every year.

Now, so what? You might ask. It’s hardly news that Ireland hasn’t been building enough homes.

The problem is, while everyone knows this, it isn’t factored into the Housing for All estimates.

“They look at it fresh every year,” says Dara Turnbull, the author of the Housing Europe report.

“They assume, in year one of the housing plan, that everyone who needs a house has one. They don’t say ‘We’re basing this on population growth, plus the 182,000 that we also need.

That’s one of the biggest flaws in the methodology – it ignores the existing unmet need for housing.

So the result of this is that even if the government hits its Housing for All targets, there would still be a shortfall of 182,000 homes which was never addressed.

“It’s fundamental,” Turnbull says.

Fair enough they have to start somewhere, but even if we hit all the targets, there will still be an unmet need for housing. So the projections are unfit for purpose.

Census data

This isn’t even factoring in other problems. The Housing for All targets were based on 2016 census data. But the 2022 census shows the population is growing much more than expected, making the assumptions based on the 2016 figures outdated.

To be clear – increasing to delivering 33,000 new homes a year under Housing for All is still better than building fewer than that.

A study published last year by the Economic and Social Research Institute (ESRI) found that increasing building to this level should help calm price inflation.

But, with that 182,000 shortfall keeping demand high, prices could still rise, just at a slower rate. So it’s no guarantee that housing will become more affordable.

There are signs the government recognises this. In a statement to The Journal, the Department of Housing said: “A review and refresh of housing targets has commenced. The work will be underpinned by independent research by the ESRI.

While this work is carried out, the Department of Housing and Minister remain committed to reaching, and where possible exceeding, the targets set out under Housing for All.

How many homes needed

So how many homes do we actually need to be building?

Unpublished research by the Housing Commission, first reported in the Irish Times earlier this year, suggested Ireland should actually be aiming for between 42,000 and 62,000 homes annually.

While this is nearly double the current targets, it follows comments from figures such as the Minister for Housing recognising the numbers have to go up.

It seems pretty certain the population rise from the latest Census will be taken into account. But will that 182,000 backlog built up over the last decade factor in as well?

As of now, that isn’t as clear. And if the shortfall isn’t factored in, the new numbers could have similar problems as the current ones.

But while plenty of numbers are thrown around for housing targets, in the end, what does all of this matter?

The reason there’s so much debate around these numbers is that getting them right is at the heart of dealing with Ireland’s housing crisis.

“What’s measured is what is acted on,” says Turnbull.

“If you’re just not counting properly, then how can policymakers effectively deal with the housing crisis if you have this elephant in the room of the 182,000 shortfall?

“Imagine you have a €100 debt. One week you pay back €50, but then you also run up another €50 debt, so effectively you’re in the same place. You never get to €0. That’s what we have here.

But people don’t care about the numbers. They just care ‘Can my son or daughter get out of their childhood home? Can they afford a house?’ So if we take that shortfall into the real world – the result is that the status quo will hold.

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