Steady growth in the real estate market despite threats to global stability
Just when it appeared that 2022 would be a turning point in the seemingly still dysfunctional Irish property market, came an unexpected cry from the past: “The Russians are coming”. It took two years to get rid of the bogeyman of a global pandemic; then, all of a sudden, just as the second anniversary of the social impasse imposed by Covid-19 and the threat to human health on our planet stabilizes, we are directly in another crisis blowing from the east cold.
Well, scary enough, there was a hint of it in those same Property & Home pages, on the now significant date of January 1, 2022.
In our 2021 Market Review and 2022 Preview, editorial contributor (and country house market specialist) Michael H Daniels wrote: “Borrowing costs may rise rapidly next year, for the first times in 10 years of exceptionally low interest rates. rates.”
He added: “Possible macro-events that could come into play are the triggering of Article 16, the fallout and risk of contagion from Chinese real estate giant Evergrande, and the conflicts in Eastern Europe.” So we’re off to a good start; Can we please tell Boris to hold off on the Article 16 solo races, and hope China doesn’t decide to invade Taiwan as a distraction?
World events notwithstanding, there remains hope for progress in moving this country towards a more mature and better performing housing market, even though this is clearly the #1 national problem facing the nation. , our politicians, and more particularly in the face of our already “locked” future. generations.
Hope, of course, isn’t going to cut it on its own. But, at least, there is more than a semblance of a plan, in the guise of the Housing for All initiative launched in September 2021, and its outline of 213 individual measures to address the country’s housing and housing deficit.
It has targets set for a nine-year period to 2030, a starting point for the next decade that is not entirely unrelated to the date the government pledged to also end the scourge of homelessness, in accordance with the terms of the Lisbon Declaration. .
Most notably, these targets are subject to quarterly updates as to progress, with the first, Q4 2021, delivered at the end of January by the leaders of the three majority coalition party leaders, remarkably enough to speak with a message and voice – even if with three different accents.
Ahead of the next scheduled general election in February 2025, they might as well have pinned range targets on their backs for opposition parties, and specifically Sinn Féin, to take aim.
What are the odds that the trio will line up the same every three months over the next three years on quarterly returns? Answers on a blank check, or on a ballot, please?
Now, we’re already a cynical nation, so let’s not dwell unnecessarily on the lofty goals that include 300,000 new homes, an average of 33,000 per year for all occupancy types, by 2030.
This is at a time when production forecasts this year will certainly see a 2021 production increase of 21,000 units, but will likely not exceed 25,000 by the end of this year.
Thus, we are already starting the first full year with a deficit, and with too high a cost of house construction and market prices.
While no one wants to return to the Celtic Tiger Zenith frenzy when 80,000 to 90,000 units a year were being produced without lending, there is at least some sort of residual awareness that production figures well over 33,000 pa can be reached.
Yes, there are clearly still all the negatives, such as labor and skills shortages, and skyrocketing material costs that have so far been blamed on the likes of Brexit, the short-lived blockage of the Suez Canal; and rising energy prices.
Now we can add to the supply chain issues even further with a “blame the Russians” twist and even higher energy prices to come that will impact production and material transportation costs.
Price leveling for some materials was tentatively underway before the latest crisis emerged from beleaguered Ukraine, and activity on construction sites is clearly on the rise. The proof is starting to shine through in housing completion numbers, but also in the immediate visual presence of traveling craftsmen, contractors’ white vans, sandwich counters at gas stations and, even, in the (slow) increase in apprenticeship places. the increase in load and the arrival of learning formulas from this year on the CAO papers of graduates.
In trying to make housing supply more affordable, negatives include the fact that labor costs are not going to come down, as this is a vendor market with ‘name your prices” sought, and the materials are subject to international trends. and pressures.
Thus, the focus should remain on such things as economies of scale, property costs and taxes, infrastructure provision, offsite construction, financing costs, contractor margins and taxation.
Perhaps the words we should cling to, for hope and shelter, are “incremental improvements”: read on.