The effects of the current pandemic and accompanying endless lockdowns have begun to hit Irish house builders hard. The closure of any construction site not falling within certain criteria since the 8th January this year has been disastrous for some, while others have managed to get by under the Social Housing banner.
Some companies have claimed it is “unjustifiable discrimination” to prevent some construction work from taking place while other projects within the sector are exempt from restrictions. This has even gone as far as the courts with Blue Whisp, which is part of Paddy McKillen Jr-owned Oakmount Group, taking the challenge against the government to the high court.
Demand but Little supply
The last 12 months has done untold damage to Ireland’s efforts to emerge from the current housing crisis. The housing market in Ireland remains characterised by undersupply and strong, mortgage-backed demand boosted by increased savings over the last 12 months which basically means there are plenty of buyers but few houses to sell.
Companies like Cairns Homes have reported that gross profit fell by almost 50pc to €42.7m in 2020 from €85.3m the prior year, according to annual results from the group. While social housing construction sites have remained in operation throughout the pandemic, private housebuilders have been off site since January. This accounts for up to 60% of the total housing market meaning our targets are nowhere near going to be met for the next couple of years at least.
Good for your portfolio?
How does all this affect your property portfolio and indeed your future portfolio? As usual the housing market in Ireland is woefully undersupplied for a myriad of reasons but essentially bad governance and far too much regulation and taxes. This unfortunate situation isn’t going anywhere soon and as such, house prices in Ireland should continue to rise for the foreseeable future as demand continues to far outweigh supply. While many House Builders will be negatively affected, as an investor you should continue to see positive yields.
As always if you need any advice or help with your property portfolio, please don’t hesitate to contact us here at KPM Group and we’ll be happy to help in any way we can.
