Housing targets in 'significant trouble' with 16% contraction in home building 

While the value of construction rose between Q3  2019 and the same third quarter of 2022, the volume of output dropped by 12.3% in the same period. Stock picture

Ireland's housing targets for 2023 and 2024 are "in significant trouble" it has been warned, after CSO figures showed a 16.2% contraction in residential building activity from July to September.

The CSO published the Production in Building and Construction Index for the third quarter of 2022, which shows that residential activity is down, as is non-residential which has dropped by 2.8% when compared to the second quarter of the year.

Based on pre-pandemic levels, there was a reduction of 12.3% in construction activity from Quarter 3 in 2019 to Quarter 3 2022. However, during the same period the value of construction increased by 6.1%.

The figures come just weeks after figures showed that construction starts in Ireland continue to fall further behind government targets.

The Government's Housing For All document targets 29,000 homes being delivered next year and over 33,000 the year after.

However, Sinn Féin housing spokesman Eoin Ó Broin said the CSO figures and the Goodbody Housing Chartbook monitor which showed a slowdown in commencements, are a worrying trend.

It shows that the trend is that residential construction activity is slowing. 

Mr Ó Broin said institutional investors are looking at higher interest rates and moving away from residential construction and added that "a lot of developers outside Dublin can't access credit".

"The question is what is the Government going to do," he said.

"They need to build more social and affordable homes and cut down the red tape in the department. 

"Output for 2022 is OK — the Government will probably miss social housing targets — but next year and 2024 are in significant trouble. 

The worry is that the minister is looking at things like tax breaks for developers. Developers don't need these, they need access to credit.

A spokesperson for Housing Minister Darragh O'Brien said other CSO figures for the third quarter of 2022 showed record numbers of homes completed. 

They said that the number of new home completions for the first three quarters of 2022 was 20,807, which is more than was seen for the whole of 2021 (20,560) or any other year since the series began in 2011.

"The Government is acutely aware of the major challenges facing the construction sector in the delivery of homes and the financing of delivering homes arising from factors like high inflation, pressures on supplies and rising interest rates," the spokesperson said. 

"Boosting the supply of new homes is the only way we can solve Ireland’s housing crisis, which is why the Government remains focused on increasing housing supply and so the Government have taken measures to bolster the sector and to ensure continued pace in the delivery of homes. 

"These measures include Project Tosaigh, which the Land Development Agency are advancing, and which aims to unlock land in private ownership that has planning permission but where delivery has stalled due to financing and other constraints, and the Croí Cónaithe cities fund which aims to bridge the current 'viability gap' between the cost of building apartments and the market sale price (where the cost of building is greater)."