Bernard Durkan
Ceist:175. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which investment funds here are contributing to the spiral of house prices; and if he will make a statement on the matter. [21581/22]
Amharc ar fhreagraThursday, 28 April 2022
Ceisteanna (175)
Freagraí scríofa
According to data from the Central Statistics Office (CSO), real estate companies account for a relatively small proportion of housing transactions. In 2020, the latest year for which data is available, such firms purchased 2.8 per cent of all transacted units. While the number of transactions from such investors has likely increased since then, it is unlikely they capture enough share of the housing market to have a significant effect on overall national property price inflation.
Institutional funds typically purchase newly built urban apartment blocks via forward – commit arrangements. Under such arrangements the investor agrees to buy a block of apartments upon completion. The guaranteed sale de-risks the project, allowing the developer to secure finance and build the block. Without such arrangements the new apartments may never be built.
Forward-commit deals have helped lead to a significant increase in the number of new apartments being built over recent years. CSO statistics show that 5,107 new apartments were built in 2021, more than double the 2,258 apartments built in 2018.
The high property price inflation seen in recent months is primarily due to an undersupply of homes in the market. The Government’s primary response to mitigating residential price inflation is to increase supply. Recent data provides encouragement about the delivery of future housing completions. In the twelve months to March 2022, 34,846 new homes were commenced, the highest level since May 2008. Moreover, planning permissions was granted for the construction of 42,991 new homes in 2021, the highest since 2008.
The overall investment required to build an average 33,000 homes per year is an estimated €12 billion, which will require finance from the domestic banking sector, international investors and the State. Significant State investment has already been committed as part of Housing for All, with over €4 billion to be invested in housing per annum to 2030.
Delivering on our housing targets will require significant resources from both the public and private sectors and I will continue to work closely with my Government colleagues to ensure these targets are delivered.