27,000 homes estimated to be built this year, "substantially below" housing need

Analysis of housing commencements and planning permissions by Goodbody forecasts that 27,000 homes will be completed in 2023, down from 30,000 last year.

The number of housing commencements across the country has been “flatlining” in recent months, as financial services firm Goodbody forecasts that 27,000 homes will be completed this year, “substantially below” the country’s estimated housing need. Picture: PA

The number of housing commencements across the country has been “flatlining” in recent months, as financial services firm Goodbody forecasts that 27,000 homes will be completed this year, “substantially below” the country’s estimated housing need.

Analysis of housing commencements and planning permissions in Goodbody’s Irish Housing Chartbook for March of this year forecasts that 27,000 homes will be completed in 2023, down from 30,000 last year.

Chief Economist with Goodbody, Dermot O’Leary, said that the 2023 estimate for housing completions “remains substantially below Ireland's estimated housing need”.

He said that housing commencements have been “flatlining” in recent months, around the annualised mid-20,000 level.

“We estimate that a total of 2,046 units were commenced in February, taking the total commenced in the past three months to circa 6,000. This is the same level of commencements as a year ago, and takes the total over the past twelve months to 27,000,” he said, adding that this commencement level is 23% below its recent peak at the beginning of 2022.

The report also highlights a downward trend in the number of planning permissions being granted for homes.

Latest CSO data shows that the number of residential units granted planning fell by 44% yoy in the final quarter of 2022, following a previous sharp decline in Q3, leading to the lowest second half performance since 2017.

The number of apartment permissions showed the greatest decline in Q4 of 2022, with a reduction of 54%, while the number of permissions for houses fell by 28%, with multi-unit developments down 25% and one-off permissions down by 33%.

Mr O’Leary said that the decline was down to a “combination of factors” at play, including resources at the planning board, changes to the planning system and viability concerns.

“The fall must be put in the context of the surge in permissions since 2019, the current level of residential activity and the ongoing legal challenges to planning permissions,” he said.

Goodbody estimates that of the 127,000 residential units granted planning in the three years up to Q2 2022, only 80,000 were commenced.

Mr O’Leary also pointed to a report by Mitchel McDermott, which notes that 29,000 units that came through the Strategic Housing Development (SHD) planning process have been subjected to Judicial Review, while a further 29,000 have not been commenced due to viability issues.