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THE COVID-19 CRISIS has had a major impact on housing supply, according to a new report.
The weeks-long hiatus on construction work as sites shut in response to the pandemic, combined with the limits imposed by social distancing requirements, mean that new houses might only reach 14,000 in 2020 – a major shortfall.
The figures come from a study by the Banking & Payments Federation, which was published this morning.
Construction work returned several weeks ago in Phase One – but with social distancing rules in place and strict new regulations.
Dr Ali Ugur, Chief Economist at the federation, said: “Ireland’s housing supply is going to take a significant hit this year given that the construction sector stopped all activity between the end of March and mid-May as well as the fact that current activity is very much limited due to work practice restrictions as part of Covid-19 health measures.”
He estimates that before the crisis the number of new houses built would have been between 24,000 and 26,000.
However, the impact of the coronavirus pandemic means that new builds will likely be between 14,000 and 16,500 this year.
Demand
The study suggests that demand for houses and mortgages might prove resilient even in the face of the economic shock from the pandemic.
Ugur said that it “may hold up better due to the important role which income levels play in housing and mortgage demand”.
Those on higher incomes, according to the study, were less likely to need the Pandemic Unemployment Payment or be on the Temporary Wage Subsidy scheme.
This meant that many of those who could afford to buy a house were least affected by the pandemic.
“Looking at these figures in the context of the mortgage market, it is earners in this same income bracket that account for the majority of those drawing down mortgages,” Ugur said.
“Given the significant and increasing share of first-time buyers in the Irish mortgage market, and income levels required to secure a mortgage, income losses during the pandemic may not have a significant effect on demand for mortgages from this cohort,” he said.
This means that the demand for new houses might be less likely to collapse in the months to come.
However, this doesn’t mean demand is unlikely to be affected at all. The full economic impact of the pandemic will still be borne out in the months to come.
The extent of Ireland’s recovery, Ugur said, will also play a role in housing demand.
Earlier this month, it was announced that Ireland’s Budget deficit hit €6.1 billion in May as spending on health and income supports added pressure on government finances.
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Thankfully well have a govt with a proven track record on social housing. No doubt they’ll stop st nothing to ensure everyone has a roof over their head.
@deisecelt: I think the report above is the first of many pandemic related excuses for things NOT getting done. They will announce all sorts of wonderful plans and projects for the next few weeks but will use the “pandemic” as an excuse when it comes time to write the cheque.
@David Corrigan: the pandemic will be a legitimate excuse for not getting many things across the line to be fair but how they prioritise the spending will show their true colours…..
@deisecelt: Exactly. I can’t see any of the three parties coming out of the next few years in good shape. None of them are proven performers in government and I can’t see things changing now.
@David Corrigan: I’ll bite, who has a proven record in government?
@Craic_a_tower: I am only stating facts. I don’t comment to encourage “bites”.
Are you happy with the fact that we have no proven performers in any of our governments past and present?
@David Corrigan: I am asking you to state the facts you claim by telling us who you believe have performed in government? You haven’t actually stated a fact yet and no doubt it is just your opinion.
@Craic_a_tower: Clearly you didn’t read my comment correctly. No party has performed in government and that is a fact. Why can’t you understand that?
@David Corrigan: so your comment really is that ridiculous? So according to you no political party ever in government has ever done anything. The whole country has remained the same since inception is what you are saying. What is your alternative? A party never in power who have also no record of performing in government? Sounds just like a moan
@Craic_a_tower: this is the problem. There is a large cohort, like David here, that have convinced themselves that we are a third world country. We are not without our problems God knows but people need to get a little perspective ffs.
@David Corrigan: throw in a bit of Brexit and you have the perfect excuse not to do anything that you promised.
@Jane: I will reply to you and the lad above in one comment. Both of you are coming to wild conclusions which does not surprise me as you both have form.
As a country we can do a lot better i.e. by electing properly qualified characters to manage our resources. We have a good education system that churns out talented people. We have a reputation for being hard working folk. But our “betters” make it very difficult to live here with the high cost of living etc.
Am I so bad in highlighting that we can do a lot better as a country? Do you not believe that or are you happy to see the nation chuck along and not realize our potential?
@David Corrigan: I think the point the two posters above are making is that we are doing better and successive governments since the inception of the state have being partially responsible for creating a business environment that affords us enough tax revenue to pay for better than decent public services while also increasing living standards hugely over the years. It is very easy to sit on the side lines and take populist pot shots but these shots are not always deserved or based on fact.
@David Corrigan: I’m not quite sure what ‘form’ you refer to. However, you said we have no proven performers in government. So if we take what you say as true, seeing as we have always had either FG or FF in government since the beginning of the state that must mean we are a third world country.
As if FFG hadn’t already caused a deliberate housing shortage.
There also hasn’t been a peep out of landlords about reducing their rack-renting prices, despite them spouting on here that their rents would drop.
Landlords and their free houses.
@Dean: Why would they drop their rents? They have bills to pay too. I doubt you would be happy to put your hand in your pocket to pay their mortgage for them if the property doesn’t have a tennant in it, or would you?
@Dean: I honestly don’t think people realise how bad things are, when the covid payment stops all hell will break loose….these things will take a while to be fully felt but its going to be a major shock…..rents will fall like a stone. I won’t even bother to say I told you so like the last time…..
By god the new government isn’t even fully formed yet and they have these ‘studies’ releasing their excuses for not providing enough housing already. Some operators.
@Sharp Elsi Mate: That’s exactly how I read it.
@Sharp Elsi Mate: I am cynical myself but have a bit of sense. The study was ongoing as they do and just came out. The government do not control every aspect of different sections and they just do their job regardless of who is actually in government. They don’t wait with baited breath for approval from a minister
@Craic_a_tower: they do have certain control over the media outlets who let this stuff out to us
@Sharp Elsi Mate: really? They control what a NGO publish? What control do you think they have over them?
@Craic_a_tower: well considering that the ngo is paid for and by the domestic banks in Ireland and the government has a 10-15% share in those banks since the crash then I’d say yes they do in one form or another.
@Dermot Foley: LOL, no they don’t. They barely have control of the output from the press offices for government departments. Have you ever worked in an NGO or state body? I have and I know what it is like. Let me guess you haven’t but assume they have control because once the government give funding the government controls them? Not how it works or ever worked
@deisecelt: let’s all hold our breath together with excitement and anticipation while waiting for the new dawn in irish politics. Over the hill comes the three wise men on the bikes to build all the houses we need and rescuing the sick and homeless on the way Banishing the greedy developers and foreign Landloards on the way. Keep holding they won’t be long.
https://www.change.org/p/irish-referendum-on-housing/edit
Put ‘em under Pressure” … by signing the Petition.
We needed a study to tell us that ? How much did thus study cost the taxpayers .
We all know because construction sector has not being working there are going to be less houses available . It’s simple common sense .
Yet no one seems to be addressing the fact that the councils have thousands of properties available to them that are already built but vacant .
This is the equivalent of Brendan O’Connor’s “the ballsy people are buying houses” post crash 2008. Bankers hyping the market. There will be tons of housing available as commercial real estate leads the way in a massive price crash post covid fall out.
@Sean Hyland: no not the same at all. There was an oversupply then and we have been undersupply for years. Some people have money and others don’t. The people with money are those that buy and those who are at risk to their jobs wouldn’t be buying. Massive differences.
@Sean Hyland: A friend of mine bought 5 properties during the recession when people were selling at rock bottom prices. People were saying he was mad but he’s as good as sorted his retirement fund now
@Dino: your friend must have had over a million in assets to start with beyond his own home
@Craic_a_tower: No, he bought the properties at rock bottom prices. He had to renovate them but the same properties are probably worth three times what he paid for them. He did have a house himself and a relative passed away leaving him some assets/money but I’m not sure how much he started with. Property down the country was extremely cheap at one point.
@Craic_a_tower: Not the same but there will be major falls and here is why (it still confuses me as to why some people refuse to live in the real world but hey what can ya do)
1. Massive public debt which will results in large tax rises
2. Banks only lending a fraction of what they are now (started already exemptions gone)
3. Massive spike in unemployment
4. Massive amount of migrants returning to their home countries
Shortage of home at present or not the above will have a massive impact on prices…..all common sense really but a trait seriously lacking in the delusional.
New government tax tax tax xxx xxx.
@Fran O’Keeffe: given what has happened and continues to happen what did you think would happen? What government would be formed where taxes weren’t going to increase? Is their a magic party?
@Craic_a_tower: you’re not much craic at all are you
@Sharp Elsi Mate: and that is the first time anybody said that bit of wit.
Money should not be an issue in building large quantities of affordable housing, plenty of public land to build on. The government will get back their money , when people pay their mortgages via the bank.
@Kevin Thompson: so you are saying public land should be used for private housing
@Craic_a_tower: Thats exactly what he is saying but I doubt he realises it
@Craic_a_tower: This is what i am referring to, local councils build houses not private property developers. “www.housingagency.ie/housing-information/affordable-home-purchase”
Its funny one of the countries biggest public works builders has staff back to work while still getting the Covid subsidy. Before anybody says ‘well that’s what the subsidy is for’ NO its not. That’s for SMEs not €350m+ turnover builders yet there one of the ones that will be giving out about the government not paying them enough to build these houses.
@Sharp Elsi Mate: The alternative is for these big companies to lay off staff due to cut backs to pay for the costs of covid 19? Is it better to keep all these people in work until things level out again or let them sit at home on the covid payment doing nothing and likely be unemployed for a lot longer?
@Dino: What?? Are you serious? These companies still have all their current contracts in place and projects to finish. These companies have all likely compiled several extension of time and labour efficiency claims to milk the projects for all there worth. They are purely leaving people on it cause its saving them a fortune end of.
You need to read these “studies” / press releases carefully from groups with a vested interest in the property market, this press release is from the Banking & Payments Federation Ireland, if there is a shortage due to construction sites closing this will of course impact on prices, any study/market research from a group with an official-sounding name should be carefully examined especially if these groups are trying to set a narrative in the media or lobby governments, if there are large numbers of unemployed people in the construction sector now is the time for governments to build social and affordable housing units or look at prefabricated homes for speed.
@John Judd: There aren’t huge numbers of people unemployed in the construction sector though as there were many developments underway prior to the shut down and these are likely to be finished. The finishing of these project will likely require more labour to finish them though which will push up the costs and if developers can’t get finance for new project from banks then we may see a down turn in housing output from developments which should have been starting from the end of march through to the end of this year or until whenever the lending market gets back to normal.
So the Journal owns Daft.ie and, as usual, publishes price pumping articles at will. Just nauseating
The headline should start off with Scamdemic or planedemic as there is no pandemic? It’s all made up scaremongering rubbish
That’s just about sums up this country! That we need a report to tell use the pandemic slowed down construction!
Give that man a high paid job please!
Bla bla bla just another excuse to cover up their bullshit not building houses and only filling their pockets , talking out there arses
When are we all going to wake up and start running the country ourselves instead of being dictated to you all the time and Keep in misery
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