Construction curbs could cut housebuilding to 16,000 units this year

Covid-19 curbs could cut new homebuilding this year to just 16,000, less than half the 34,000 needed annually to tackle the housing crisis, experts warn.

Private housebuilding is on track to restart next month as the Government unwinds Level 5 pandemic restrictions, which include Europe’s only construction ban.

Housebuilding in the Republic could fall to 16,000 this year, according to Richard Joyce, managing director Europe with global quantity surveyor Linesight, which has just published its key report on the industry here – the Ireland Handbook 2021.

Most estimates, including those from the Central Bank, calculate that the Republic needs to build 34,000 homes a year to solve a housing crisis that has dragged for most of the past decade.

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Private residential construction accounts for a significant share of the 60 per cent of building industry now shut under Level 5 restrictions. Social housebuilding is continuing, along with projects including data centres.

Blue Whisp, part of developer Paddy McKillen jnr's Oakmount, recently began a High Court challenge to the partial construction ban, saying it was discriminatory.

According to Linesight, a late push in the second half of last year ensured that housebuilding topped 20,670 for all of 2020, just 400 short of what was achieved in 2019.

However, Mr Joyce said had the Government not halted building for a period last year, completions could have hit 25,000. “We are still way below what’s needed,” he said.

Mr Joyce questioned whether the closures in 2020 and this year were wise, as there was little evidence the industry contributed to the spread of Covid-19 when it did reopen.

Cases detected

The Construction Industry Federation’s figures show that 145 positive cases were detected across the sector after it reopened last year, when employment varied between 129,000 and 137,000. This compared with more than 1,000 in meat processing.

Mr Joyce said there was a “dangerous misconception around” that construction had somehow contributed to Covid’s spread, when in fact there was no real evidence to support this.

Linesight says construction output reached €24.7 billion in 2020 – 7.3 per cent or almost €2 billion less than in 2019.

Assuming building restarts in April, the company estimates output will be in the region of €21.6 billion, €3.1 billion less than in 2020 and €5 billion below the previous year.

Mr Joyce suggested that much of this work would ultimately go ahead. “While activity has been delayed, demand has not been hugely dampened,” he said.

About 148,000 people worked in the industry in the first three months of last year. Private residential construction accounts for a significant share of the 60 per cent of building industry now shut under Level 5 restrictions.. This fell to 129,000 in the second quarter, which was marked by the initial pandemic lockdown.

Employment recovered to 137,000 between the beginning of July and end of September before dipping to 136,400 in the final three months of 2020.

“But there are a lot of positives this year,” Mr Joyce said, pointing out that companies in healthcare, life sciences, pharmaceuticals and data centres are all building new facilities.

Some challenges remain in office building and retail, but he said confidence was returning in these industries.