House-building fall-off 'may signal property peak'

A reduction in the number of houses being built during a six-month period could herald the peak of the housing market, it was claimed today.

There have been significant reductions in the number of housing starts in the last three months of 2005 and the first quarter of 2006.

Norman Craig, managing director of Davis Langdon PKS Review, said: “Whether this represents a trend or an aberration remains to be seen.

“However, it must be pointed out that six months of sizeable reduction commencements cannot be ignored and may be seen by some as heralding the peak of the housing market.”

The construction cost management firm said 80,000 housing completions should still be achieved this year, with construction continuing to grow with the total volume expected to increase by 1%.

“Once again, housing led the way as the amazing growth of the Irish construction industry continued in the first three months of 2006. In terms of housing, there was a 25% growth in completion of new homes in January, February and March. Compared to the same period of 2005, a total of 22,000 new homes were completed as against 17,500,” he said.

The company’s summer review found general construction, including offices, shops, hotels, hospitals and schools, continued to grow in the first part of the year.

Construction cost increases were expected to range from 2% to 3% for this year, with wage increases under a new National agreement and rises in fuel costs.

Mr Craig said he believed average tender levels in the industry will not increase by more than 4% in 2006.

“In the first six months of 2006, evidence of a two-tier market is emerging. Competition for major projects in excess of €10m has meant that tender levels for the more attractive projects have been very competitive and in some cases have shown little or no increase on 2005 tender levels,” he said.

“However, it is interesting to note that for smaller and less attractive projects, increases of up to 5% have been recorded with an average increase of 4% on the 2005 levels.”