Number of house builds set to fall after record year

THE number of homes built across the country is set to decline this year following a record number of house completions in 2004.

According to construction industry consultants Davis Langdon PKS (DLPKS), the number of new homes to be built this year will fall by 3%, or 2,300, to 74,600. In 2004, 77,000 new homes were built, up 8,000 on 2003.

Though house prices are still soaring, demand is being met by the industry and new homes may fall out of favour with house hunters this year. Changes to stamp duty in the last budget will make it more attractive for first-time buyers to look at second-hand homes.

Davis Langdon PKS also forecast the Irish construction industry output will rise by just 1% this year. The consultants say a 10% rise in output from civil engineering firms will be offset by the fall-off in house building.

The consultants expect growth to continue at 1% for the next four years, meaning 15 years of unbroken growth in the sector.

DLPKS said that 2004 turned out to be another good year for the Irish construction industry, with output increasing by 7%.

"Once again, housing was the star performer. Over 77,000 new housing units were completed during 2004, compared to 69,000 in 2003. Infrastructure continued to grow showing a 3% increase. General construction continued to lag (it declined by 9%) and recorded reductions in both private and public investment," DLPKS managing director, Michael Webb said.

"For the first time for a number of years, growth is expected in general construction. Civils will also continue to grow. We believe that housing may somewhat decline in 2005. Overall, we expect a 1% increase in the volume of new building in 2005."

DLPKS said construction input costs continued to rise in 2004, outstripping the Consumer Price Index - 6.3% compared to 2.9% - and it expects cost increases of 4% in 2005. "For the first time in many years, materials costs rose at a rate higher than labour costs. Much of this increase was accounted for by the rise in raw material costs due to the unprecedented demand for raw materials from China," Mr Webb added.