'Likely reduction' in housing output next year unless commencements rebound

The fall off in commencements last year could see fewer completions in 2027

There were over 16,000 commencements during 2025, down from more than 69,300 in 2024. The surge in 2024 was largely due to developers rushing to take advantage of expiring development levy waivers. File picture

There will be a “likely reduction” in housing output next year unless housing commencements rebound significantly throughout the rest of 2026, the Banking and Payments Federation, Ireland (BPFI) has warned.

In its latest housing market monitor, the BPFI pointed out that official figures show there were over 16,000 commencements during 2025, down from more than 69,300 in 2024. The surge in 2024 was largely due to developers rushing to take advantage of expiring development levy waivers.

Throughout 2025, a total of 36,284 homes were completed which is a 20.4% year-on-year improvement. Much of the increase was driven by a surge in apartment completions, which reached 12,047 in 2025, up 38.7% from 2024.

The BFPI said that while there is a positive outlook for the housing market in 2026 the steep decline in commencements so far this year points to risks in supply next year.

Chief executive of the BPFI, Brian Hayes, said commencements fell sharply in key local authorities, particularly Dublin city, Fingal, and South Dublin, with activity declining by almost 84% in Fingal and South Dublin.

“Self-builds accounted for 23% of all starts, the highest share since 2018. Notably, units commenced in 2024 must be completed by the end of 2026 to qualify for levy waivers, so we should expect overall housing output to reach nearly 39,000 units in 2026, assuming the strong momentum in construction continues,” he said.

“However, the low level of commencements in 2025, particularly in relation to housing schemes and apartments, at only 12,600 units, points to a likely reduction in output in 2027 unless commencements rebound significantly during 2026.” 

When it comes to the second-hand property market, the BPFI said the number of existing or second-hand homes sold fell for the third straight year in 2025 to 38,502, the lowest level since 2020.

“This implies that fewer second-hand homes are available to buy than in recent years but also that more homeowners may be staying and investing in their current homes rather than moving,” Mr Hayes said.

CSO data shows that spending on home improvements has risen in recent years, increasing from €3.9bn in 2019 to over €7.5bn in 2024. The BPFI said it is likely this figure reached €8bn in 2025.

Mortgage drawdowns

“This sustained rise in improvement activity has coincided with the decline in second-hand property sales and mover purchaser mortgage drawdowns observed over the past three years,” Mr Hayes said.

Annual mortgage drawdown volumes increased by 7.7% in 2025 to 46,358 with first-time buyers accounting for 60% of all drawdowns. Mover purchaser mortgages represented just 19% of the market in 2025.

While total mortgage drawdown values peaked at nearly €40bn in 2006, almost half of that total was driven by residential investment letting, switching, and top-up loans.

By contrast, these categories represented only 16% of total drawdown values in 2025.

“Overall, 2025 delivered solid housing output and continued strength in the mortgage market and the outlook for 2026 looks positive for both the housing and mortgage markets,” Mr Hayes said.

“However, the steep decline in commencements during 2025 presents risks to future supply next year without a significant rebound in scheme and apartment commencements during this year.”