Consultants forecast 76,000 new houses

A RECORD 76,000 houses will be built this year, according to leading construction industry consultants Davis Langdon PKS (DLPKS).

They said the supply of housing, which was just under 70,000 in 2003, will increase again to meet the continued demands of first time buyers. It estimates that construction output will rise by 3.5% this year compared to an earlier forecast of 1% growth.

Michael Webb, Managing Partner of Davis Langdon PKS, said that the total number of new housing units will peak in the second half of 2004 and decline next year.

"Thanks to the continuing growth in the housing sector, we have revised our outlook for 2004 to suggest a 3.5% growth in the volume of new construction. In January, we were less optimistic in suggesting a 1% increase."

Stripping out the residential market, DLPKS predicts 6% growth in the civil engineering sector which includes roads, drainage and water treatment projects. However, because of the decline in capital investment in third level education and sluggishness in the office sector, DLPKS predict a 3% decline in general construction in 2004.

"With another wage increase due in July and the significant increases in steel prices, plus the effect of oil prices on the manufacture of cement and aluminium, we would expect construction cost increases of up to 3.5% before the end of the year."

Mr Webb warned about the possibility of more cost increases in the pipeline, particularly for metal materials.

"Dramatic rises of up 20% to 35% have been experienced in structural steel and steel reinforcing bars over the past six months. Similar increases have been experienced in metal decking, steel cladding, pipes and ducts.

"The inexorable and dramatic growth in the Chinese economy has led to the position where it is reputed that China is using up to 50% of the world's total annual supply of steel with consequential effects on the rest of the world."

He added that one consequence of the dramatic rise in steel prices may be that many steel framed buildings could be undervalued for insurance purposes.