The IFAC report points out that Ireland’s infrastructure is 25% lower per person compared to the average for high-income European countries. This gap has narrowed since 1995 but remains substantial. The report identifies the planning system’s “slow and unpredictable nature” as a significant barrier, increasing costs and delaying project delivery. The planning and objection system is holding back tens of thousands of homes, and the effectiveness of the Government’s recent planning legislation, designed to overhaul the system, remains to be seen.

Housing is a critical area of concern. The report states that to meet the current demand, Ireland needs to significantly increase its housing output. Current targets set by the Government’s Housing for All programme are based on outdated data and need to be revised upwards to reflect the growing population. The IFAC suggests that improving productivity in the construction sector could reduce the number of additional workers needed from 80,000 to less than 20,000. The Fiscal Council estimated that 68,500 homes need to be built annually to catch up and meet the growing population, which is more than double last year’s housing output.

One of the key issues highlighted is the low productivity in the construction sector, which is about 32% lower than the international average. The report suggests that adopting modern construction methods, such as offsite construction and factory assembly, could significantly improve efficiency and reduce costs by 20-40%. Larger firms, which are typically more productive, are better positioned to invest in these technologies. The National Infrastructure Summit, held annually, provides a platform for stakeholders to discuss these challenges and explore innovative solutions.

The report emphasises the need for sustained public investment and better value for money. Ireland already spends a high amount on public investment relative to the size of its economy, but the challenge lies in maintaining this level of spending and improving its efficiency. The new Planning and Development Act is expected to help streamline the planning process, although its effectiveness remains to be seen. The Fiscal Council warned that an additional burst of spending could add to inflation and advocated for increasing taxes or reallocating spending from elsewhere.

The infrastructure deficits are not limited to housing. Significant shortfalls exist in healthcare, transport, and electricity, all of which require urgent attention. Addressing these deficits will require a multi-year, planned approach, with a focus on improving productivity and reallocating existing resources. The population is expected to grow by 10% over the next decade, further straining existing resources. Additionally, the ageing population will increase the demand for healthcare services, necessitating more investment in health infrastructure. The number of people aged 65 or over is expected to more than double in the next 30 years.

The need for additional workers is driven by Ireland’s rapidly growing population and the associated demand for infrastructure. The population growth, coupled with an ageing demographic, will place increased pressure on existing infrastructure. The IFAC report suggests that if health capital investment grew by 5% every year from its current high level, Ireland would reach average European infrastructure levels by 2033.

As Ireland transitions to a low-carbon economy, there is also a pressing need to invest in sustainable infrastructure. This includes upgrading the electricity grid to accommodate renewable energy sources and improving public transport to reduce carbon emissions. The National Infrastructure Summit provides a platform for stakeholders to discuss these challenges and explore innovative solutions. Topics at the summit include understanding Ireland’s population trends, policy and regulatory updates, and leveraging innovation to build future-proof infrastructure.

The median asking price for a home in Ireland now stands at €365,000, reflecting a 0.8% increase from the previous quarter. The rise in prices is more pronounced outside the capital, where prices have surged by 8.5% over the year, bringing the median asking price to €315,000. In Dublin, the annual increase was 6.2%, with the median price reaching €455,000.

Several factors contribute to this upward trend. One significant driver is the limited supply of homes. As of September, there were 13,100 homes listed on MyHome.ie, a figure significantly lower than pre-pandemic levels. This shortage is exacerbated by the reluctance of potential sellers who fear they might not secure a new property after selling their current one.

Economic factors also play a role. The relaxation of Central Bank mortgage lending rules for first-time buyers has increased the share of first-time buyers with higher loan-to-income ratios. Additionally, average earnings have risen, which has helped drive up mortgage approval values.

In Waterford, house prices have seen a substantial increase. In Waterford City, prices in the third quarter of 2024 were 3% higher than a year previously, with the average price of a home now at €250,000. In the rest of Waterford, prices rose by 8% over the same period, with the average price reaching €348,000.

The overall housing market in Ireland remains under pressure due to the country’s population growth, which has been 1.9% for the second consecutive year. To match the UK’s housing-to-population ratio, Ireland would need to build an additional 206,000 homes.

Despite the challenges, there are some positive signs. New housing starts have risen to 49,000 in the year to July, and MyHome.ie expects completions to increase sharply next year to above 40,000 units. However, the impact of build cost inflation and elevated energy costs remains a concern.

In addition to these factors, the report highlights that one in seven properties are now selling for 20% over the asking price, indicating a highly competitive market. This trend is particularly evident in Dublin, where the demand for housing continues to outstrip supply.

The report also notes that the average time to sale agreed was just 12 weeks in the third quarter, close to a historic low. This rapid turnover is a clear sign of the high demand and limited supply in the market.

Conall MacCoille, Chief Economist at Bank of Ireland, commented on the situation, stating that the rising population and economic growth are reminiscent of the Celtic Tiger era. He emphasised the need for a significant increase in housing supply to meet the growing demand.

Joanne Geary, Managing Director of MyHome.ie, expressed optimism about the future, noting that the increase in housing starts and expected completions are positive signs. However, she also stressed the importance of sustained efforts to address the imbalance in the market.

The Irish housing market is experiencing significant price increases driven by limited supply, economic factors, and population growth. While there are efforts to increase housing supply, the market remains tight, and prices are expected to continue rising in the near term.

The review, conducted by the Department of Housing, Local Government and Heritage, highlights the significant challenges faced by the private rental sector. Rising construction costs, high interest rates, and increasing material prices have made it difficult for developers to build new rental properties. As a result, the supply of rental homes has not kept pace with demand, leading to higher rents and a shortage of affordable housing.

One of the key recommendations from the review is to provide financial incentives to developers. These incentives could include subsidies, tax breaks, or grants to offset the high costs of construction and make it more viable for developers to invest in rental properties. The goal is to bridge the gap between the high costs of building and the lower sale prices that make rental projects less attractive to developers.

The review also emphasizes the need for a comprehensive approach to reforming the private rental sector. This includes enhancing regulations to protect tenants, ensuring that rental properties are safe and secure, and creating a more stable and predictable rental market. The government aims to create a framework that benefits both landlords and tenants, making the rental market more efficient and sustainable.

Public consultation has been a central element of this review. The Department of Housing has encouraged the public to share their views and experiences with the private rental sector. This input is crucial for shaping policies that address the real needs and challenges faced by renters and landlords alike.

Housing Minister Darragh O’Brien has acknowledged the difficulties in meeting housing targets and the need for innovative solutions. He has faced criticism for over-promising and under-delivering on housing schemes, but he remains committed to finding effective ways to increase the supply of affordable housing. The Croí Cónaithe Cities Scheme, for example, aimed to deliver 5,000 apartments in cities but has struggled to attract developers, with only a fraction of the target achieved so far.

The review’s findings underscore the importance of government intervention in the housing market. By providing incentives and creating a supportive regulatory environment, the state can encourage more investment in rental properties and help alleviate the housing crisis. The ultimate goal is to ensure that everyone has access to safe, affordable, and secure housing, whether they are renting or buying.

The government’s review of the private rental sector highlights the need for financial incentives for developers, enhanced regulations to protect tenants, and a comprehensive approach to reforming the rental market. Public input will play a crucial role in shaping these policies, with the aim of creating a more efficient, affordable, and sustainable housing system for all.