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Central Bank expects housing completions to hit 35,000 this year

A switch of construction workers from commercial schemes as the office market stalls will help ease constraints that have held back housing
A switch of construction workers from commercial schemes as the office market stalls will help ease constraints that have held back housing

​Economists at the Central Bank think new home completions will rise to 35,000 this year and increase further in 2025 and 2026.

That would bring delivery in line with current Government targets but short of where many experts assess demand.

In its latest Quarterly Bulletin of economic data and forecasts published today, the Central Bank predicts what amounts to a ‘soft landing’ for the economy, with growth slowing but continuing, and inflation coming down sharply to 2pc for the year.

The jobs market is set to remain robust, although unemployment may rise from the current near-historic low. Average nominal wage growth of 4.7pc a year from 2024-2026 combined with the slow down in inflation means real higher incomes, shoring up the domestic economy even amid a global slowdown in trade.

A switch of construction workers from commercial schemes, as the office market stalls, will help ease constraints that have held back housing, researchers think.

Completions are forecast to increase to 36,500 and 37,000 in 2025 and 2026, depending on planning permissions and connections to water and power utilities.

However, pushing beyond that level of new homes even over time looks challenging, Central Bank Director of Economics and Statistics, Robert Kelly, said.

Even so the outlook is more upbeat than yesterday’s forecast from private sector economist John McCartney at BNP Paribas Real Estate Ireland, who warned housing completions could fall this year to between 30,000 and 33,000 units before a recovery in 2025.

Meanwhile, a breakdown of what was built last year shows apartments accounted for more than a third of new homes, though relatively few were available to ordinary buyers

The regular Housing Market Monitor from Banking & Payments Federation Ireland (BPFI) revealed that apartment completions jumped 28pc to more than 11,600 units last year.

However, waning interest from institutional investors in financing apartments means State funding will be needed to underpin future supply, it said.

Overall, a total of 32,695 completions were recorded in 2023, a 55pc rise from 2019.

“The number of apartments completed in the last two years alone was more than the total number of apartments built in Ireland in the 10-year period to 2021,” BPFI’s Brian Hayes said.

The share of completed apartments is likely to continue in the years ahead, with almost half of planning permissions between 2019 and 2023 granted for apartments.

This is the equivalent of 101,883 units.

But in Dublin, just 523 new apartments were bought by households last year out of 9,100 completions.

Meanwhile, apartments account for over 81pc of the 15,385 housing units under construction in the capital.

“This suggests that an increased number of projects aimed at social and affordable housing, as well as cost rental homes, will be coming onstream and should help to free up supply for household purchasers and in turn, ease the demand pressure from potential homebuyers,” Mr Hayes pointed out.

Source: Caoimhe Gordon and Donal O’Donovan, Irish Independent, 12/03/2024



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