Department of Finance warns pace of housing delivery needs to pick up to meet 'medium-term targets'

Update on housing also cautions global uncertainty poses risks to material costs and house prices

Department of Finance said house price inflation remained 'sticky' at about 7%, with price growth outside of Dublin, where constraints on homes to buy are 'more acute', now the key driver. File picture: Gareth Fuller/PA Wire

The Department of Finance has sounded a note of caution when it comes to housing, warning more momentum was needed while global uncertainty represented a “risk for costs and prices in the near-term".

In its monthly update on housing, the department’s report struck a different tone to that of the Department of Housing, which has repeatedly hailed strong momentum in the delivery of homes in recent weeks.

“While the annual increase in completions is encouraging — momentum will need to pick up through the year to progress toward medium-term targets,” it said.

“In addition, planning permissions and commencements will need to strengthen to secure the pipeline for delivery beyond 2026.” 

After repeated failures to meet annual targets in terms of home building in Ireland, the Government has strongly welcomed positive figures in recent months showing an increase in the number of homes being constructed.

In the first quarter of this year, there were 7,856 new dwellings completed in Ireland. This was 32.9% higher than a year prior and the highest for the first three months since the series began in 2011.

Housing minister James Browne said this showed the pace of homebuilding “continues to move in the right direction” and represented “real and sustained progress”.

A further press release from the Department of Housing last month hailed “strong momentum” in housing delivery.

However, the Department of Finance warned momentum would need to pick up in future. Additionally, it said other factors that could impact housing delivery.

“The recent pick-up in materials costs reflects stronger construction sector sentiment across the EU at the beginning of the year,” it said. 

Global demand for materials and persistent geopolitical uncertainty represent an upside risk for costs and prices in the near-term.

It said house price inflation remained “sticky” at about 7%, with price growth outside of Dublin, where constraints on homes to buy are “more acute”, now the key driver.

“The large annual increase in commencements is distorted by the particularly slow start to commencements in 2025.

“Permissions will need to strengthen, and dormant permissions activate, to progress toward targets. The annual increase in completions is encouraging, but momentum will need to increase through the year to progress toward medium-term targets.”