New home construction starts may fall "well short" of targets

Increased costs is impacting the viability of apartments

In the three months to October, apartment commencements fell by 29%, with housing scheme commencements down 23%.

Housing construction starts in Ireland continue to fall further behind government targets with a drop in the number of new apartments and houses.

According to Goodbody's Housing Chartbook monitor, a total of 1,841 units commenced construction last month, down 31% year on year. It means the annual total for housing commencements to October is 26,608 down from a peak of approximately 35,000 earlier this year.

Following the lifting of Covid restrictions on the building sector early last year there was a surge in home construction starts. It is expected that a record 28,000 homes will be completed this year.

However, these latest figures show the growth in the supply of new homes will stall.

"The commencement trends suggest that housing output may stall in the mid-20,000s over the next 18 months," Goodbody's Dermot O'Leary said. 

"This is well short of the Government’s Housing for All target of 33,000 units and even further below estimated need over the medium term."

According to the report, in the three months to October, apartment commencements fell by 29%, with housing scheme commencements down 23%.

"Viability of apartment construction has been compromised by increased construction costs and yields recently," the report states.

"Viability may also be an issue in terms of housing construction, but other factors, such as land availability, is also playing a role. As we have noted previously, the PLCs continue to take an increased share of the market due to larger landbanks, efficiencies of scale and the absence of funding problems."