House construction rebounds strongly but shortages remain

Building is significantly higher than in 2016 — but it's not enough yet to address the severe lack of residential properties

Outside of Dublin, construction activity was highest in Cork, Kildare, Meath, Louth, and Galway. File Picture. 

Housing construction rebounded strongly after the lockdown restrictions on the building sector were lifted in April, new figures show.

Just under 19,000 homes were under construction in June, amounting to a year-on-year increase of 38.4%, according to the latest GeoView Residential Buildings Report. 

The report found that building levels in Ireland in June were 4.3 times greater than they were in June 2016. Outside of Dublin, construction activity was highest in Cork (11.6% of total), Kildare (9.7%), Meath (7.5%), Louth, (7.2%) and Galway (6.1%).

Homebuilding well short of pre-Covid levels

The report prepared by EY Economic Advisory found that the level of residential property transactions is still some way short of pre-Covid levels, despite the increase in construction activity.

“Our data shows that residential construction activity has responded well since Covid-19 restrictions for the sector were lifted in April," Dara Keogh, CEO of GeoDirectory said. "There were over 5,000 more residential buildings under construction last month than there were in June 2020. 

"Additionally, the GeoDirectory database recorded over 25,000 new residential address points in the past 12 months. 

This is still short of the levels of stock needed to ease demand, but the data trends suggest that things are moving in the right direction. 

Despite the demand for housing, the report found there were 92,135 vacant residential properties in the State in June, resulting in a national average vacancy rate of 4.5%. This figure remains unchanged from the corresponding period in 2020. 

Lack of housing is a key challenge

With further Covid restrictions eased this week, the severe lack of suitable housing has reemerged as one of the key challenges facing the State.  The publication of the Government's Housing for All plan, which will determine the State’s housing policy and plans until 2030 has been deferred until the end of August or early September.

June also saw a surge in mortgage approvals jumping more than 11% compared to May and by 129.9% compared to June 2020 according to the Banking & Payments Federation Ireland (BPFI).

Of the 5,203 mortgages approved last month, some 2,755 were for first-time buyers (53%) of total volume, while mover purchasers accounted for 1,273 (24.5%).

Increase in mortgage values and volumes

A separate report from the BPFI on mortgage drawdowns for the three-month period to the end of June shows a significant increase in both mortgage values and volumes.

A total of 9,625 new mortgages to the value of €2.2bn were drawn down by borrowers during the second quarter. This represents an increase of 45.4% in volume and 52.5% in value on the same period last year.

"The value of first-time buyer and mover purchase mortgages on secondhand properties both reached their highest Q2 levels since 2008," BPFI chief executive Brian Hayes said. 

"This underlines the severe limitations we have seen on the construction industry during the pandemic which is having a clear impact on supply. With all residential construction now underway again the challenge remains how to satisfy the strong demand for housing, clearly evident in today’s figures, with the continued pressure which has been growing on supply.”