Value of construction projects slumps by 20%
New data published by consultancy group Building Information Ireland puts at just under €1.36bn the value of construction projects — over all aspects from residential and commercial to industrial and social — started during the first three months of 2015. This figure is down by €333m on the €1.69bn measured for the same period last year.
However, a 42% year-on-year increase — to nearly €3.7bn — was noted in the value of projects at planning application level, which augurs well for the future.
“The good news for the construction industry is that despite the drop recorded in the value of construction activity in the first quarter overall, the data shows that the sector in Ireland is in recovery,” said Building Information Ireland managing director Danny O’Shea.
“The increase in value of construction projects applying for planning permission has been driven by the rise in the residential and commercial/retail sectors, which recorded increases of 91% and 59% respectively.”
The agricultural and medical sectors also saw strong yearly increases in property project value at planning application stage while, on a geographical basis, Leinster and Dublin led the way, although both areas also ranked highest in terms of project commencement declines, with respective drops of 52% and 28% noted.
Building Information Ireland’s research also noted that, on average, it takes 79 weeks for a construction project to get from the planning application stage to actually starting on site; with residential projects taking around 80% longer to commence than the average construction project. Education-orientated builds are the fastest from application to start, taking 39% less time than the industry average.
Yesterday’s survey coincided with a call from the Real Estate Alliance (REA) for the abolition of development levies and the Vat rate on new homes, as key elements in solving the national housing supply crisis. According to REA, the removal of the 13.5% Vat rate on new homes would help narrow a gap that is making new homes “financially impossible” to build, while the abolition of the Part Five levy for social and affordable housing would help reduce the cost of a new house by an average of €60,000.
“There is a huge gap in the cost of building and bringing a house to the point of sale and what it can achieve on the open market,” said REA chief executive Philip Farrell. “Unless this gap is closed, we will not halt and solve the growing national housing crisis.”
