Government still far behind in the provision of homes

They are the left behind generation.

They may be successful and well paid. But their lives - and sometimes their plans to have families - are on hold until they can afford a home of their own.

Many of them are frustrated adults living with their parents or sharing rental accommodation.

Their prospects of owning a place seem to be receding further into the distance as prices rise.

This week official figures from the Central Statistics Office showed the pace of house price acceleration is picking up.

The cost of buying a home has risen almost 10% over the past 12 months.

It is the fastest pace of growth for 21 months.

Property costs are 12% ahead of the peak they reached in 2007, just before the property bubble burst when the economy crashed.

Prices are escalating due to a lack of supply, coupled with a growing population and a remarkably healthy economy.

The State's Housing Commission composed of experts in the sector has estimated the shortfall of homes is up to 256,000.

This week the Central Bank estimated how many houses would be required to address that deficit as well as how many homes would be enough to satisfy the demand from the ongoing growth in the population.

The bank found 52,000 units would need to be built over the next 25 years.

However if the State wished to deal with the issue over a decade it would need to deliver 68,000 homes per annum.

Last year 33,000 homes were built in Ireland.

Although the Government has predicted about 40,000 could be built this year, the Central Bank said output would be lower this year than last.

Put simply, Ireland is only delivering half of the number of homes it needs if the Government was to address the housing issue in a decade.

The Central Bank has also analysed the economic impact from not building enough houses and apartments.

The bank’s Director of Economics, Robert Kelly, said it would result in "a higher cost of living, and in turn, a higher cost of doing business in Ireland, ultimately damaging our global competitiveness."

Money is not the problem.

The economy is continuing to expand, the number of jobs is increasing and the taxes flowing into Government coffers are exceptionally strong.

The State’s finances have also been given a boost with €14bn in back-taxes due to be paid by Apple.

Despite the enormous housing need, the State has been warned against sinking all its windfall into housing by the International Monetary Fund because it could result in a sudden burst of inflation.

Although efforts have been made to step up house building, the number of workers in the industry has remained static at 170,000 over the past two years.

The Central Bank argues there needs to be improvements in the planning system to catch up with demand, plus an increase in the provision of serviced land and greater incentives for private industry to invest in development.

It also points out most building companies are small operators.

There are only two construction groups on the Irish Stock Exchange.

Smaller companies don't enjoy the efficiencies of scale of larger players and therefore the industry is less productive than it should be.

The Central Bank also said that due to the scars left on the building industry by the financial crash, there has been an underinvestment in machinery and equipment.

However it is not all bad news.

This week the Land Development Agency, the body which organises the provision of housing on State land, launched its first major scheme.

The impressive Shanganagh Castle project in Shankill, Co Dublin will provide almost 600 homes with the first 300 going on the market next month.

While social and cost rental houses will be on offer, home buyers will be particularly interested in the affordable homes scheme.

The market price is reduced because buyers are purchasing 70% of the home and the local authority holds the remaining 30%.

That shareholding can be bought out after 40 years or the purchaser can opt not to buy it.

If the home is inherited the owners’ offspring would have to buy out the council’s stake.

People can qualify for the scheme based on their income, as RTÉ previously reported.

It is the first of a number of similar schemes which the Land Development Agency is delivering with local authorities.

Opposition politicians have criticised the merits of such a system, but it is delivering badly needed housing.

The broader issue is that Ireland is still far behind where it should be in the provision of homes.

And that will have far-reaching economic and societal consequences.