Construction shutdown will lead to housing shortage lasting years, builders say

Irish Home Builders Association says current lockdown likely to aggravate housing crisis

Construction sites across the State were ordered to close earlier this month as new Covid-19 restrictions came into force for all but essential building projects. Photographer: Chris Ratcliffe/Bloomberg

Construction sites across the State were ordered to close earlier this month as new Covid-19 restrictions came into force for all but essential building projects. Photographer: Chris Ratcliffe/Bloomberg

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The supply of new homes could be reduced by up to 8,000 this year as a result of the current stoppage in construction, the head of the Irish Home Builders Association (IHBA) has warned.

Construction sites across the State were ordered to close earlier this month as new Covid-19 restrictions came into force for all but essential building projects.

IHBA director James Benson said the hiatus was likely to aggravate the State’s housing crisis. He said a members’ survey had highlighted that work on more than 16,000 homes across 273 sites had been put on hold as result of the restrictions.

With the measures expected to be kept in place until at March 5th, this is likely to reduce supply by around 8,000 units this year “and that’s presuming there are no further restrictions”, Mr Benson said.

In its most recent bulletin, the Central Bank said it expected new home completions to be in the region of 18,500 in 2020, rising to between 21,500 and 23,500 in 2021 and 2022 respectively. This is 23,000 fewer than it had predicted prior to the pandemic.

“We fully appreciate the seriousness of the current situation and the strain on the health system but everyone would still agree we continue to live with a housing crisis,” Mr Benson said.

“We’re going to see a significant impact on housing delivery in 2021 and into 2022 and beyond that,” he said.

Knock-on implications

Apart from the reduction in headline supply, Mr Benson said the current phase would also have knock-on implications for labour, finance and investment.

Some companies have already been forced to put workers on temporary or permanent lay-off, he said.

“These people – if they can – will have to find alternative employment in the short term and some may not return to their original employment. So we could have an escalation of the existing skills shortage,” he said.

Mr Benson also said finance costs attached to construction would continue to rack up even if building has stalled .

And he said investment also may suffer as it relies on a level of certainty which the current “stop-start” market cannot provide.

As of January 8th, all non-essential construction sites were ordered to close with the exception of social housing and some private homes, which were near complete, as part of the new regulations to curb the spread of the virus.

The IHBA members’ survey – carried out in recent days – found that work on 16,375 homes across 273 active projects has stalled as a result.

While works continue on 883 social homes and 461 private homes nearing completion, this accounts for just 7.6 per cent of homes that were being developed when the current restrictions came into effect on January 8th.

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