New house building has stalled and looks unlikely to meet growing demand, driving already high prices up further, the main banking industry lobby group has warned.
Around 32,000 new homes will be built in the Republic by the end of the year, the Banking and Payments Federation of Ireland (BPFI) predicts in a report published on Thursday. The figure is in line with other forecasts and falls short of the 52,000 a year that groups such as the Central Bank say the State needs to get on top of its decade-old housing crisis. It is also short of the 40,000 pledged by the outgoing Government this summer.
“The rate of increase in housing supply seems to have stalled in 2024 unless there is a significant level of completions in the last quarter of the year, and still remains below requirements,” said Dr Ali Uğur, the federation’s chief economist.
House prices increased 10 per cent over the 12 months to September, according to figures from the State’s Central Statistics Office. The midpoint of prices for which homes sold during that time was €346,000.
Dr Uğur argues that unless they can boost productivity housebuilders are unlikely to complete the number of new homes the Republic needs with their current resources. “The construction sector in Ireland has a higher proportion of small firms and its productivity has been low compared with other countries in the euro area,” he says.
The economist repeats his organisation’s call from earlier this year for a guarantee scheme for small and medium-sized building companies to allow them finance projects that are viable but for which they have insufficient cash themselves. “This would enable the banks to provide finance to additional clients and developments without compromising credit underwriting standards,” he says.
Enabling smaller builders to complete more homes than currently is critical to increasing housing, Dr Uğur says.
Politicians highlighted the Republic’s decade-old housing crisis as a key issue for voters in last month’s general election, while all parties that contested the poll made ambitious pledges for new home building.
It is widely expected that whatever coalition emerges from talks on forming the next government, that administration will commit to solving the problem.
Earlier this week EY-Euroconstruct, an independent network of economists that tracks European building industry trends, also predicted that the final number of new homes built here would be around 32,000.
Dr Uğur maintains that Irish builders face several challenges. “There were over 237,000 people employed in the construction sector in the third quarter of 2007 compared with just over 176,000 people employed at the end of the third quarter of 2024.”
Along with housing the industry faces demands in other areas and particularly arising from the Government’s Climate Action Plan.
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