Shortage of housing is a ‘critical barrier’ to investment in Ireland, Ibec warns

It has warned the shortage of housing supply is becoming “the critical barrier” to continued business investment and could damage the country’s social cohesion for decades to come.

“An inadequate supply of affordable housing is the single largest impediment to attracting and retaining talented workers, without whom business investment and expansions are not possible,” Ibec said in a housing report to be published today.

One of the measures unveiled by Ibec would reduce the cost of a typical €400,000 new home by €30,000, it claims, and could be implemented “with immediate effect”.

Ibec has called for a Vat refund of 5pc for buyers of new homes to help hard-pressed home hunters.

Figures from the Central Statistics Office (CSO) last week showed almost 30,000 housing units were completed in Ireland last year. But the number of completions this year will be lower, even as demand remains robust.

Cost inflation, the unviability of some housing projects and planning problems are all contributing to the slowdown.

Most professionals in the property sector believe 50,000 homes need to be built every year to meet demand.

“The housing crisis has increasingly become a concern in relation to cohesion in the workplace and society more broadly,” according to Fergal O’Brien, Ibec director of lobbying and influence.

“Younger workers, in particular, are financially pressed by ever-higher rents and the receding prospect of homeownership,” he said.

“This ultimately spills over into issues around well-being and productivity in the workplace, while in the longer-term, if left unchecked, will also create emerging challenges in terms of pension adequacy and people’s broader stake in society over the coming decades.”

A recent Ibec survey of business bosses found 70pc of companies cited a shortage of available housing for staff as a challenge for 2022. Nearly a third of those firms (30pc) said it was a major challenge.

Mr O’Brien said from an employer perspective, there is a need to “reinvigorate” the policy drive around the availability and affordability of housing.

He said a “suite of measures” is required to address construction financing deficits, to reform the planning and procurement system and to ramp up the ambition to deliver affordable and cost-rental housing.

Ibec has also called for a new state-backed fund, ultimately bankrolled by the Local Property Tax, that would subvent development contribution levies for new residential units, where the infrastructure benefits the wider community.

The group also says a number of measures are needed to address the rental crisis.

“The rental market is consistently mentioned by Ibec members as a crucial barrier to Ireland’s competitiveness as a location for investment,” its report said.

“Growing numbers of members report challenges in not just finding affordable rental accommodation, but in finding any suitable accommodation. If Ireland is to be a location which both attracts and retains talent into the future a sustainable, affordable, secure and high-quality rental market will be key.”