Housebuilding up strongly, but 'Government may still miss target'
BNP Paribas Real Estate Ireland: Housebuilding activity up sharply in March reflecting 'early-stage' commencements.
Housebuilding activity has increased significantly, but it will take some time before newly completed homes are delivered, separate surveys have suggested.
The monthly BNP Paribas Real Estate Ireland index showed Irish construction activity expanded in March for the first time since June last year, and grew at its fastest rate for almost two years, thanks to strong pickups in activity in both housing and commercial building, including office developments.
Housing activity was driven by the long-tracked increase in "early-stage" commencements, which points to increased levels of supply coming down the line in future years. However, BNP Paribas believes "that housing delivery may struggle to reach the Government's target in 2024", its director and head of research John McCartney said in a commentary on the March survey.
Official figures have shown a rise in housing starts which appears to have given confidence to new Taoiseach Simon Harris to reiterate a pledge that the Government would build 250,000 new homes between 2025 and 2030. However, analysts have warned about linking planning permissions and housing commencements to any speedy delivery of new homes because many of the new housing schemes are apartment blocks which take many years to complete.
The surge in activity in commercial construction last month, as tracked by BNP Paribas, was likely linked to "the final push to finish office blocks that were started some years ago", Mr McCartney said:
Meanwhile, business group Ibec cited official figures showing a significant increase in housing commencements that means that about 70% more homes were started in the first two months of the year than a year earlier. However, increases in commencements will not automatically mean that large numbers of new homes will be built in the near term, Ibec said in its quarterly outlook.
"While the uptick in residential building is welcome, large multi-unit developments take several years to complete, meaning many of last year’s commencements may not enter the housing stock until 2025 and beyond," Ibec said.
"The number of housing units receiving planning permission has also bounced back, after a 20% reduction in permissions granted last year. Within these, the trend of larger developments, more apartments and fewer once off houses is continuing," the business group said.
Ibec also hailed the general "robust" performance of the economy. It projects the economy will grow 2% this year and expand by 3.4% in 2025, as measured by GDP, helped by falling inflation and cuts in interest rates by the European Central Bank.
Gerard Brady, Ibec head of national policy and chief economist, said:
"It remains the case, however, that intensified global competition in some sectors and relatively weak growth in key trading partners, particularly in the eurozone, will mean more subdued export growth than had been the case for much of the past decade," Mr Brady said.
And disruptions to global trade and the potential fallout for the Irish economy will likely become more frequent, the business group said in the outlook.
"Whilst the domestic market remains in a much better position than in much of Europe, there are broader concerns about the strength of the global economy which will weigh on Irish growth in the coming years," Ibec said.
"For the Irish economy, this means there will need to be a renewed focus on cost competitiveness, skills, infrastructure and our capacity to innovate to safeguard our export-led growth model," it said.
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