If you are a homeowner in Great Britain at the moment you might be worried about an extremely flat residential market, that isn’t the case if you are a homeowner in Northern Ireland, though there are some relatively hidden issues within this situation. Average house prices in the UK have fallen 0.5% month-on-month in March. In Northern Ireland prices have risen 8.7% over the year. And average rent costs are 51% higher than they were five years ago and we have the highest rate of co-residence in the UK, with nearly a quarter of young adults living at home. The reason why this housing landscape appears so bleak is a simple economic equation of supply and demand. Our housing supply is grossly mismatched against demand.

Last year, 5,848 new homes were completed. This figure fails to touch even the underwhelming ambitions of the Housing Supply Strategy, which aims for 100,000 homes over 15 years. There’s clear evidence we have a housing shortage but what’s behind this supply squeeze? Is there no desire to build homes? Do we not have the skills to deliver? None of the above. The primary reason homes are not being built is because our wastewater infrastructure is on the brink of total collapse.  

The extent of the crisis in our wastewater system cannot be overstated. NI Water currently faces a £2bn funding shortfall by the end of the next Price Control period in 2033. As a result, there are 100+ areas across the region where development cannot proceed due to wastewater capacity constraints. This explicit, wilful, underfunding is impeding the development of over 15,000 homes. As the NI Fiscal Council Sustainability Report noted, NI Water estimates that it would take 18 years of above-average real terms investment to deal with the infrastructure backlog right now. With such striking figures, you’d think urgent action is being taken to correct our path away from infrastructural collapse.

Instead, the Executive continues to underinvest in this vital infrastructure. The parameters of the PC21 business plan provided by NI Water were first set out with the intention of tackling issues of underinvestment. This has not materialised as expected. Rather than the £500m per year recommended by the Utility Regulator, NI Water has had to plan for a £321m annual scenario since 2024, leaving a £650m shortfall across this price control period. This gap is only set to widen as we enter PC28 next year with NI Water identifying more than £5bn worth of essential wastewater needs across Northern Ireland.

It is of course not realistic to expect the Department for Infrastructure to wholly front the bill. Given the constraints of the Executive’s overall budget, it is unlikely a sustainable solution can be found through Government means alone. An NI Audit Office report in March 2024 found, in the words of the Auditor General, that “the current funding model that applies to the Department and NI Water creates uncertainty and constraints around securing and using resources” and recommended an independent expert-led review into funding options be actioned.

A common misconception that we already pay for water persists in debates about NI Water’s funding model. While understandable given that almost every country outside the island of Ireland charges for water in some capacity, this hasn’t been the case in NI since 1998 when the linkage between the Regional Rate and payments to the NI water service was broken. In January 2026, in a revision of a 2025 report from the NI Chamber, CEF and NIFHA identified a mechanism capable of beginning to move the dial on our growing wastewater crisis, a small domestic levy for households (excluding households on benefit and housing association tenants).

This is a model which has the capacity to create a long term sustainable, multi-year investment structure for NI Water. It should be at least considered. As recommended by the NI Audit Office, a comprehensive review of NI Water’s funding model should be urgently commissioned, at least to inform future decisions which may be taken on the viability of alternative funding mechanisms.

It’s clear no political party is willing to take risky decisions with an election around the corner but continuing to kick the can down the road is no longer a response. The public will judge the Executive on its inaction.

Paul McErlean, Director of Build Homes NI

Established in 2024, Build Homes NI seeks to provide direction to solve Northern Ireland’s housing crisis and unlock the housing market to deliver for everyone. Build Homes NI represents some of the largest local developers who have collectively invested hundreds of millions of pounds in construction activity across NI, providing and supporting hundreds of jobs among subcontractors, professional services and the wider supply chain.