Data showing slow-up in house builds ‘not accurate’

Figures released yesterday by the Central Statistics Office (CSO) which indicated a decrease in the level of residential construction are probably not an accurate reflection of the housing market.

That’s the view of Davy Stockbrokers analyst, David McNamara who highlighted the CSO’s own warnings that the construction data could be volatile, given a recent update of the way the index is compiled as a result of significant industry changes in recent years.

Mr McNamara also said that the building and construction index carried a margin for error given that it’s a survey-based study, and said data previously released by the CSO, which showed house builds had increased this year, was likely a more accurate indicator of the sector.

“In the first two months of the year, 5,247 house builds were started, compared to 645 in the same period in 2013, albeit with many projects brought forward due to the introduction of building standards in March.

“Moreover, in the year to May, completions totalled 3,941 compared to 2,997 in the same period in 2013. In this context, the second consecutive quarterly fall in residential work in the index is therefore puzzling.

“There have been huge changes in the construction sector in recent years. The CSO has had to update the index which could lead to some volatility and explain what we are seeing here,” said Mr McNamara.

CSO figures reported a second-quarter fall of 1.9% — leaving the volume of residential building 8.8% behind the same period last year — despite an overall increase in activity in the sector of 4.1% on the last quarter.

Meanwhile, property consultants Savills, in their pre-budget submission, recommended a postponement of the Government’s mortgage guarantee scheme aimed at helping first-time buyers into the market.

Further encouraging demand in a market lacking in supply will lead only to inflation and could cause the re-inflation of a housing bubble, Savills director of research, John McCartney warned.

Savills also proposed a reduction of Vat on new homes from 13.5% to 9% for two years; a reduction of development levies and the removal of stamp duty on purchases made after downsizing.