Sherry FitzGerald, Ireland’s largest estate agent, announced today that approximately 62,000 new homes will be required each year to meet demand in the short term. Although positive movements have been made to increase housing supply over the past number of years, with approximately 32,700 new dwellings completed last year, demand continues to grow. This has largely been driven by demographic changes.
Using the latest population estimates from the Central Statistics Office (CSO), and the assumption that the average household size will fall to the EU average of 2.3 by 2036, Sherry FitzGerald Research estimates an annual average housing demand of 56,200 units per annum. This demand is heavily weighted towards the beginning of the projection period given current shortages in the market, with approximately 62,000 units per annum required over the next few years. As such, given the various challenges faced by the sector, it is likely that a significant supply deficit will continue to permeate the Irish residential market in the short term.
Commenting on the forecasts Marian Finnegan, Managing Director, Sherry FitzGerald said “Recent population projections from the CSO have made it clear that current housing targets are well below what is needed in order to close the gap between supply and demand. Housing output needs to be increased to 62,000 units annually over the next few years. There are significant hurdles to achieving this however, including labour constraints, adequate infrastructure and a shortage of serviced land.”
The continued imbalance between supply and demand continues to drive price inflation in the second-hand market. The average value of second-hand homes increased by 1.8% in the quarter, bringing cumulative price growth in the year to date to 5.7%, with an annual growth rate of 6.6%. This compares to annual price inflation of 3.0% recorded in September 2023.
Our latest research shows that in Dublin, average values grew by 2.0% during the quarter, resulting in a year-to-date increase of 6.0%. The annual growth rate in Dublin has risen to 6.6%, significantly higher than the 2.0% recorded in the previous twelve months.
Interestingly, average values outside of Dublin rose at a slower pace than in the capital this quarter, reiterating the convergence in price inflation we have seen over the past number of quarters. Average values grew by 1.6% in the quarter. Annually, price inflation is just below the capital at 6.5%. This is a robust increase compared to the 4.4% annual growth rate recorded in September 2023.
Turning to supply-side issues, it is unlikely that the level of completions achieved in 2023 will be surpassed this year. From January to June 2024, a total 12,730 residential units were completed, 8.6% lower than the first half of 2023. Additionally, between 2015 and 2023, an average 43% of total new dwelling completions were completed in the first half of the year. This suggests that completions for 2024 are likely to be similar to those seen in 2023.
Despite the increased interventions undertaken by the government in recent years to address shortages in the market, significantly more needs to be done. Recent reports by the Central Bank and the Department of Finance highlight the need for substantial private investment in the sector if higher levels of completions are to be achieved. Without this investment, increased upward pressure will be placed on rents and prices, eroding affordability and increasing the need for more social and affordable housing.
In conclusion, Marian Finnegan, Managing Director, Sherry FitzGerald stated, “It is disappointing that the government missed the opportunity to address a vital element of the accommodation crisis in Budget 2025. Institutional investors are an essential element of the market, providing much needed rental accommodation. Therefore, it is imperative that a key goal of the next government is to attract private equity to Ireland.”
For any further information, please contact:
Jill O’Neill
PR Director
Sherry FitzGerald Group
Ph. 01 237 6500 / 086 252 3277
Marian Finnegan
Managing Director
Sherry FitzGerald Residential & Advisory
Ph: 086 814 8251
