Housing construction down 90%

BUILDERS will complete 10,000 housing units next year – a 90% drop from the 92,000 units building boom of 2006 – Goodbody stockbrokers reveal.

The Construction Industry Federation said yesterday their projections indicate that the value of output in construction across all sectors in 2010 will fall to €10 billion next year, down from an estimated spend of €12bn this year, and down from €19bn in 2009.

Goodbody analyst Deirdre Ryan, in a note to clients, said that house building has dropped precipitously over the past two years and continues to decline rapidly.

“While housing registrations are the more timelier indicator of house building trends, the more complete data set are commencement notices, which include both developer and one-off housing starts. The latest data show 433 units were commenced in November, a 53% drop on an annual basis.”

While the monthly rate of decline has fallen, “in absolute terms, the level of starts continues to fall”, she said.

Mr Ryan said commencements in the three months to November were 91% below their peak, with housing registrations down 97% from their peak in the quarter to February, indicating the scale of decline in developer-led building projects.

“One-off housing units continue to dominate any building activity that is taking place. In the quarter to November, one-offs accounted for almost three quarters of housing units commenced, a proportion that rose steadily throughout 2009. As such one-offs are set to be the main contributor to completions this year, which we forecast at 12,000 units,” she said.

However, the continued weakening trends in housing starts, Goodbody said, indicate building will reduce even further below this level next year, where we forecast 10,000 units – representing a peak-to-trough decline of over 90% in completions.

“By 2011, residential output will account for just over 3% of GNP, down from a peak of 15%. While we envisage the Irish economy returning to growth in the second half of 2010, the trends above highlight just why this recovery will be led by the external sectors of the economy rather than the domestic areas.

“Growth in domestic demand is not set to resume until 2011,” Ms Ryan said.