Lack of big builders ‘threatens housing targets’ says Goodbody

In the Census of the Irish Housebuilding Industry, Goodbody chief economist Dermot O’Leary says the lack of scale of Irish housebuilders 'remains a major issue'

'The 10th largest homebuilder in Ireland commenced just 250 units last year. This lack of scale threatens the attainment of Ireland’s housing requirements over the coming years,' according to Goodbody's report.

The top 10 Irish housebuilders accounted for a third of all house building starts last year and many builders operate on a very small scale, increasing the risk for the Government reaching its targets to ease the housing crisis, according to broker Goodbody.

In the report, A Census of the Irish Housebuilding Industry, Goodbody chief economist Dermot O’Leary said that the lack of scale of the Irish housebuilders “remains a major issue”, with many builders building very few homes each year.

The report focuses on the stock market-listed builders Cairn Homes and Glenveagh Properties — the largest and second largest home builders in the Republic — which between them accounted for 14,000 housing units, or 15% of all housing starts over the last five years since 2019, according to Goodbody.

“The next three biggest providers of homes in Ireland in recent years have been main contractors as opposed to homebuilders” said the report.

“Our analysis highlights the distinct lack of scale of homebuilders in Ireland. 

The top 10 builders of homes in 2023 accounted for 32% of total commencements in Ireland, relative to 42% in the UK. 

Goodbody highlighted the role played in housebuilding in Ireland between homebuilders and contractors.

“Noting the distinction between homebuilders/contractors, the share by the top 10 homebuilders falls to just 21% in Ireland. 

"The 10th largest homebuilder in Ireland commenced just 250 units last year. This lack of scale threatens the attainment of Ireland’s housing requirements over the coming years,” according to the report.

The report is the latest to put increased focus on the number of new homes that will be required to meet the needs of a growing population and an expanding economy, if the Government is to achieve its targets under its Housing for All flagship programme.

The Economic and Social Research Institute (ESRI), in its major report last month, warned that the latest census data showed that the population was growing more rapidly that anticipated.

It said that the Government’s National Development Plan may need to be revised to take account of the increased demands for healthcare, education, transport, as well as housing needs.

There were 33,000 housing starts last year, but many forecasters project that many more units will need to be built each year over multiple years, if housing and rents are again to come into the reach of the majority of citizens.

The Goodbody report also warned that housing output is failing to keep up with demand. It also notes that apartment building accounts for a significant share of all housing.

“In 2023, there were circa 33k home completions, up 55% from pre-covid levels,” Goodbody said.

“The mix of output has also changed substantially over this period.

“In 2023, the share of apartments in total home completions rose to a record high of 36%, while the proportion of new builds that were one-offs fell to an all-time low of 17%,” according to the report.