Irish house building suffers 'sustained decline' in April

The survey also showed that input price inflation quickened

Escalating building products costs may be hitting housebuilders, a leading monthly survey suggests. Picture: Denis Minihane

Housing output showed “a sustained decline” last month, in a sign that escalating building products costs may be hitting housebuilders, a leading monthly survey suggests.

The survey by BNP Paribas Real Estate Ireland showed that output expanded in the commercial part of construction, which includes offices and industrial buildings, and fell for civil engineering, but that output contracted sharply in residential housing.

“Two unwelcome developments in April were a sharper contraction in residential activity and a pick-up in input cost inflation,” said John McCartney, director and head of research at BNP Paribas Real Estate Ireland.

“The steeper slowdown in new home building is clearly concerning, and somewhat surprising, given the sustained rise in residential commencements since last November. The intensification of cost pressures bucked the trend of the last 18 months, but was relatively slight,” Mr McCartney said.

The survey, which is based on purchasing managers working in the industry, also showed that input price inflation quickened in April from March.

Little respite was offered in terms of any easing in inflationary and supply pressures.

"In fact, the extents to which supplier performance worsened and input prices increased were greater than seen in March. Still, firms were optimistic in their outlook for the future,” according to the survey.

The overall index for Irish construction posted a reading of 48.4 where a reading of 50 marks the difference between construction output expanding or contracting in the month. At a reading of 42.8, housing activity posted the sharpest decline in April, while civil engineering also contracted with a reading of 46.4. Commercial activity posted a reading of 51.4, suggesting that growth in output in that area was at a moderate rate.

“The rate of input cost inflation has been on a downward trend since its peak in October 2021 but, against this trend, the rate of costs increases picked up slightly in April,” the survey showed. “Inflation of the rates charged by sub-contractors also quickened from March. This was despite the most sizeable worsening in their quality since the end of last year,” BNP Paribas said.