There is now a clear consensus that Dublin is facing a chronic housing shortage. But according to property consultants, Savills Ireland, the real focus should be on how public policy can help to address this by accelerating the delivery of much-needed new homes.

The Housing Agency’s estimate that Dublin needs an additional 7,500 housing units per annum corresponds closely with estimates set out by Savills at a major property conference last week.  

According to Director of Research at Savills Ireland, Dr. John McCartney, an estimated 25,000 new homes are needed across Ireland each year to cater for population growth, declining household sizes and the dilapidation of existing stock. Of these, around 7,000 are needed in Dublin.  

However, McCartney argues that this this point is, to an extent, moot:

“Everyone knows that there is insufficient housing in Dublin to meet demand, and that this is driving up prices. The focus now really needs to be on how we address this deficit.”

Looking forward, Savills is proposing a number of simple measures which would accelerate the delivery of new housing, leading to more orderly and sustainable price growth:

• Reduce VAT  - According to McCartney:

“Many people are unaware that builders have to pass 13.5% of every new home sale back to the Government in VAT. If this was reduced to 9%, as has been done in the tourism and hospitality sector, some housing schemes which cannot be profitably undertaken at current construction costs would immediately become viable”.

• Reduce Local Authority Development Levies – All of Dublin’s local authorities have reduced development contributions since 2013. However, the reductions have not kept pace with the 50% decline in Dublin’s house prices. Therefore, today’s developers are being forfeit a higher proportion of the sales price of each unit in the form of levies. Further reducing levies and freezing them for a set period into the future would make schemes viable and incentivise builders to break ground on new developments.

• Reduce Density Requirements – Due to demographic factors – not least the 23% collapse in the number of 20-somethings in Dublin since 2009 – housing demand is currently focused on family homes.  However, while some local authorities have taken note of this and begun to relax their density requirements, others are still insisting on very high density apartment developments. Given the costs associated with building apartments (e.g. the cost of providing underground parking), and the fact that the strongest demand in many areas is for housing, this inflexibility is currently making development unviable in locations.