Building forecast revised down

AIB Global Treasury has revised down its forecast for new house builds completed this year to 77,000, from 80,000.

In a commentary on available data released yesterday, AIB said house guarantee registrations, an indicator of building activity in the housing sector, fell 52 per cent year-on-year in the third quarter. Registrations are down 40 per cent for the first nine months of the year.

Building firms lodge house guarantee registrations with an insurance company before they commence construction. Registrations provide a guide to completions around nine months forward.

In its October bulletin on the housing market, AIB Global Treasury said the data suggest that the downturn in housing activity was gathering pace. Due to the lags from registration to commencement to completion, the slowdown is only now beginning to be reflected in completion levels, the bank's economists said.

New housing completions were up 2.6 per cent in the first five months of 2007 compared to 2006, but in the three months to August they declined by almost 21 per cent.

AIB is also cutting its forecast for housing completions in 2008 from 60,000 to 57,000.

The Central Statistics Office's Production in Building and Construction Index, also released yesterday, shows that production in the overall building and construction fell by 8.1 per cent in the first quarter of 2007. The value of the market was down 2.5 per cent.

The fall-off in production was due to the contraction in housing activity which decreased 19 per cent by volume and 13.9 per cent by value. The volume of residential output has decreased on an annual basis every quarter since the second quarter of 2006, according to the CSO.

The volume of production in civil engineering was up 27.1 per cent year-on-year in the first quarter. For the same period the output in the building and construction sector grew 10.9 per cent in the euro area and 9.9 per cent in the overall European Union.

Other than Ireland the only other states to show a decrease in activity were Portugal (-6.9 per cent) and Hungary (-0.2 per cent). The largest increases were in Bulgaria (62.8 per cent), Poland (51.3 per cent) and Lithuania (45.5 per cent).