Increase housing project activity sparks confidence in workload

Despite the pause in overall growth, work on housing and commercial projects expanded for the third month running. Picture: Larry Cummins

Increased activity in the housing and commercial construction sectors were reported last month, with builders and developers expressing confidence of expanded work for the year ahead.

The BNP Paribas Real Estate Ireland Construction Index — the body which monitors activity in the sector — dipped below the 50.0 no-change mark in May.

This signalled a broadly stable output for the housing and commercial construction sectors.

The reading was down from 53.2 in April, and ended a two-month sequence of expansion.

Despite the pause in overall growth, work on housing and commercial projects expanded for the third month running.

New orders continued to rise in the month of May, as firms again saw new business come through their doors.

The BNP Paribas Real Estate Ireland Construction Index also recorded growth in construction-related employment.

Firms said staffing levels were up for the sixth month running in response to new orders on housing and commercial projects.

Almost 90% of building firms now expect to be as busy or busier in one year’s time, compared with 81% feeling that way some nine months ago.

News-flow from the construction sector remained positive in May, owing to the continued increases in activity seen across the key residential and commercial segments.

“The former is no surprise — even looking through disruption, which may have been caused by the development contributions waiver deadline in April — housing commencements have been on a sustained upward trend since October 2022,” the director and head of research at BNP Paribas Real Estate Ireland, John McCartney, said.

On the commercial side, activity has been driven by office construction in Dublin, where more space was delivered in Q1 than in the entire of 2023

The BNP Paribas Real Estate Ireland Construction Index also reported that input costs increased sharply during May amid higher material prices, but the pace of inflation eased to a four-month low.

“Forward-looking indicators on the dashboard are now uniformly pointing in the direction of continued expansion,” Mr McCartney added.

“Order books have been replenished over the spring months. Materials purchases and employment are up as a result.

“Supporting these trends, input costs inflation has stabilised and supply chain issues appear to be easing with lead-times shortening, ” he said.

Meanwhile, the new president of Chartered Surveyors Ireland, Kevin Hollingsworth, called on local authorities to dramatically increase the number of building control inspections they carry out on new buildings notified to them.

Mr Hollingsworth said that Ireland’s approach to the enforcement of building regulations requires a cultural shift.

At the moment, local authorities are required to only inspect between 12% and 15% of new buildings notified to them 

He then explained that some local councils did not even meet that inspection threshold.

Mr Hollingsworth added that tens of thousands of people all over the country are now grappling with the financial and emotional costs of legacy issues — such as mica, pyrite, and apartment defects.

Mr Hollingsworth said that, unless Ireland invested in quality control measures, we could be storing up issues for the future — particularly when it comes to the introduction of modern methods of construction, which will be critical in increasing housing output and reducing costs in the year ahead.