The State will have to play an increasing role in sharing risk with the private sector to ensure the stability of future housing supply.
That is according to the Banking and Payments Federation Ireland (BPFI), which said the additional State assistance will be needed because of the declining interest of institutional investors in financing the development of apartments.
The BPFI’s Housing Market Monitor for the last four months of last year shows that apartment completions last year rose by 28% to over 11,600.
This, it said, accounted for most of the 10% increase overall in finished new housing in 2023.
Overall, 32,695 homes were completed during the year, up 55% on the levels recorded in the last year before the Covid-19 pandemic, 2019.
Apartments made up 35% of that total, up from 16% in 2019.
"The number of apartments completed in the last two years alone was more than the total number of apartments built in Ireland in the ten-year period to 2021," said Brian Hayes, Chief Executive of BPFI.
"It is also likely that the share of apartments will increase further in the coming years as nearly half of all planning permissions approved in the period 2019-2023 were for apartments (101,883 units).
Mr Hayes added that most new apartments are built for the non-household sector.
"Following on from a strong year in terms of housing output in 2023, we expect further increase in housing supply in 2024," he said.
"However, it is likely that a significant share of output in 2024 will be accounted for by apartments."
"Given the declining interest of institutional investors in financing the development of apartments, the State will have to play an increasing role in terms of risk sharing with the private sector to ensure the stability of future housing supply, in addition to current initiatives aimed at improving the viability of some of the projects."
The chief economist with Banking and Payments Federation Ireland, Dr Ali Ugur, has said investor interest from public companies, such as affordable housing bodies, in building housing is still continuing with State support.
Speaking on RTÉ's Morning Ireland, he said the rising interest rates mean it has become more expensive for private companies, so they are reconsidering the yields from housing units.
"It's more than likely for the Government to partner, in addition to the current initiatives, to partner with the private sector both in terms of providing accommodation for the social and affordable housing cost rental and as well as the private owner occupier segment," he stated.
In relation to the house completions, he said these are mostly housing schemes and apartments accounted for around 35% of the competitions last year.
Mr Ugar said it is difficult to put a number on the price of these units as "it can differ depending on the region".
