The Government’s review of Home Building Finance Ireland (HBFI), a State-backed initiative to help fund home-building projects that the banks were not prepared to back, notes that the project, operational since 2019, contributed to the delivery of 1,850 new homes in 38 developments as of the end of 2020. It expects to fund the development of 7,500 homes over five years, but has been hampered somewhat by the pandemic.

The review notes that 68 per cent of the 1,850 homes were for private housing while 32 per cent were for social housing – it doesn’t say how much of the latter is for the rental sector.

Less risky

As part of the review, the Government held a public consultation on the efficacy of the scheme, which elicited 13 responses. Some of the respondents, it says, “raised concerns that available finance was being directed towards social housing and private rental sector developments as it was perceived as less risky for funders at this time creating a more acute gap for build-for-sale projects”.

It’s likely that most of the schemes being delivered via HBFI funding are for the rental sector because it delivers the best returns for investors and, as the above contribution states, is perceived as the least risky. That’s why we’re seeing so many international funds flood in here.

Affordability problem

The recent outcry over institutional investors isn’t so much about the institutional investors themselves but the fact that the market is increasingly delivering high-cost rental solution for consumers while home ownership rates are collapsing. For too long, the focus has been simply on supply, when the real problem, and the one that is proving so corrosive to young workers, is affordability. The percentage of 25-39 year olds – in other words those of prime working age – that own their own homes has dropped from 22 per cent in 2011 to 16 per cent in 2016 and is now reckoned to be as low as 12 per cent. That statistic tells you all you need to know about where the market is going.

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