Housing commencements up 35% per year to date and expected to surpass 15,000 for the first time since 2008
Construction Industry Federation (CIF) analysis shows that 14,917 new houses were started in the Jan/Oct period this year. This represents an increase of 35.6% in the commencement of new housing from 11,000 to 14,917 units up to October 2017. If this trend continues, the CIF estimates that total commencements will approach 18,000 by the end of 2017.
“The CIF welcomes Housing Minister Eoghan Murphy’s announcement that will see changes to requirements for building apartments in Ireland,” says CIF Director General, Tom Parlon. “We are engaging with the Government on this and believe that such guidelines can make the building of affordable apartments in urban centres such as Dublin, economically viable once again. The Government’s changes here are a vindication of our consistent position that apartment building is not viable currently due to overly restrictive building requirements. Traditional developers, banking institutions and international institutional investors cannot deliver apartments under the current system.“
ESRI upgraded required housing output
“The ESRI recently upgraded the required housing output target for Ireland from 25,000 per year to 35,000 per year. The commencement of 15,000 houses throughout the first 10 months of 2017 is clear progress. However, our members are reporting difficulties in four key areas that will prevent the achievement of a sustainable level of housing output. These are:
- A lack of available finance outside the greater Dublin area for housebuilders
- Delays in the planning system
- Requirements in apartment building, making it financially unviable
- Lack of available serviced land (ie, land lacking infrastructure such as roads and water connections)
Where there is finance available, construction is occurring strongly. Hotel, commercial, student accommodation and particular types of housing are also showing strong activity. This is fuelled by prudent lending by financial institutions. However, there is pent-up demand for more housing and apartments that currently surpasses the levels of finance available. The Government’s move to establish the Housebuilding Finance Ireland agency is to be welcomed. It is essential that legislation is put in place to allow the HBFI to fund housing and apartments in the cities and beyond.”
Houselessness single biggest threat
Houselessness is the single biggest threat to the Irish economy, even more so than Brexit in the medium term. It has the potential to undermine our economic progress and our efforts to attract FDI. From a societal perspective, increasing supply from its unsustainably low base toward the ESRI’s target is the solution to homelessness, soaring rents and house prices rising to exorbitant levels.
The Construction Industry is responding with new housing supply, which will ultimately assist in easing the pent-up demand. However, it must also have certainty around investment decisions, a collaborative construction environment and the time to bring forward new supply to market.
A recent survey by RSM and the CIF found that 63% of those involved in housebuilding who sought to borrow from financial institutions in the last year reported difficulty in securing finance and this figure rose to nearly 70% amongst companies with a turnover of less than €9m.
The cost of building a house and providing a house are two different things. Non-construction factors such as cost of development finance, the cost of land, levies and VAT all influence the cost of delivery.
Currently housebuilding, particularly outside Dublin, is often not viable as many housebuilders cannot gain access to finance at the right terms from banks or other sources. In order to ensure balanced regional development across Ireland and increase the industry’s capacity to deliver housing, it must be viable for construction companies to build.
The CIF analysis has also shown that the level of new residential completions for 2017 will be in the region of 18,000 units, with this figure expected to increase to approximately 22,000 units in 2018. Completion figures are currently under review by the Department of Housing as they are based on ESB connections figures. The long-term view of these figures shows an increase in completions. The first 10 months of 2017, also saw 15,062 units completed, an increase of 3,265 units (28%) on the same period in 2016.
New Residential housing 2006 – 2017
New Residential housing commencement figures over the last decade:
- 2017 – (first 10 months of the year only) 14, 917
- 2016 – 13,234
- 2015 – 8,747
- 2014 – 7,717
- 2013 – 4,708
- 2012 – 4,042
- 2011 – 4,365
- 2010 – 6,391
- 2009 – 8,599
- 2008 – 22,852
- 2007 – 48,876
- 2006 – 75,602
Commencement rate over the first 10 months of 2017 increased by 35.6% from 11,000 (throughout the same period last year) to 14,917 units.
In the first 10 months of 2017, there were 15,062 units completed, an increase of 3,265 units (28%) on the same period in 2016.
CIF estimates that the level of new residential completions for 2017 will be in the region of 18,000 units. This compares to 12,666 units in 2015, illustrating an overall increase of 42% from 2015-2017.
CIF forecasts that the completion rate will increase to approximately 22,000 units in 2018.