Homebuilding surge in late 2020 despite Covid-19 but supply outlook still downbeat

This year’s supply will be affected significantly by the new restrictions on building sites in the latest and third lockdown, economists say

The number of new homes is still hugely short of the annual 30,000 new-home completions needed and means the pressures on house prices and rents, as well as the homeless crisis, will likely get a lot worse when economic recovery gets under way. Picture: Joe Giddens/PA Wire

A late-year surge in housebuilding helped make up for some of the fallout from the Covid-19 restrictions on building sites earlier in the year but the outlook for housing remains downbeat.    

New CSO figures show builders completed many more units than once expected in the last two months of the year to deliver just over 20,676 new homes, remarkably only slightly fewer than the number built in 2019 despite the restrictions that closed building sites last spring.

However, the number of new homes is still hugely short of the annual 30,000 new-home completions needed and means the pressures on house prices and rents, as well as the homeless crisis, will likely get a lot worse when economic recovery gets under way. 

Moreover, economists point out that this year’s supply will be affected significantly by the new restrictions on building sites in the latest and third lockdown. According to the CSO, there were only 411 fewer homes built in 2020 than in 2019, after 7,400 new units were built in the last three months of the year.

The quarter-four surge was driven by builders delivering many more apartments than they had in the same period in 2019. The figures show that postcodes in Dublin and the main commuter belt around the capital accounted for the largest number of home competitions. 

At over 870 units, the W91 Naas Eircode accounted for the single largest number of units, while the H91 in Galway, the T12 code in the southside of Cork, and the V94 code in Limerick also featured in the top 10 areas for completions.

The CSO said that with apartments accounting for a larger part of the mix, the average size of new homes continues to fall. Nonetheless, half of all what the CSO calls “new scheme dwellings” completed in 2020 were semi-detached properties, little changed from the previous year. 

The 20,676 new homes completed last year compares with 21,087 units built in the pre-pandemic year of 2019. That total was sharply higher from the 17,916 units built in 2018 and the 14,355 units built in 2017.

Only 4,575 new homes were built in 2013 as the economy felt the after-shocks of the banking and property collapse that crippled many housebuilders. The CSO said its figures do not include student accommodation, though it may in time include the units in its release.  

Nonetheless, it said over 1,300 “bed spaces” were created as part of student accommodation schemes in the fourth quarter alone and means that 10,740 student units have been built since the summer of 2016.

Last month, the Central Bank based estimated that 23,000 fewer houses would be built due to the fallout of the pandemic. It forecast about 21,500 new homes would be built this year and 23,500 in 2022. 

And economists said the outlook was favourable for a significant catch-up to occur. "The fall in starts, however, has been more notable, suggesting lingering impacts into this year," said Goodbody chief economist Dermot O'Leary. 

Bank of Ireland chief economist Loretta O'Sullivan said with housing shortages mean "house price expectations are on the rise again".