Momentum in housebuilding picks up pace, but demand also rising

‘Price rises are inevitable’, warns Goodbody report

Photograph: iStock

Photograph: iStock

 

The number of houses completed so far this year rose 46 per cent, indicating strong momentum in new housebuilding.

But the Goodbody BER Tracker warned demand was also rising, with price rises inevitable.

According to the study, a total of 765 units were finished in February, an increase of 38 per cent year on year, while 1,608 units were completed in the opening two months of the year. Compared to 2016 levels, the number of completions was up 145 per cent.

Despite this growth, Goodbody warned there was still a significant gap between demand and supply, with less than 10,000 units completed in a 12 month period and demand estimated at 35,000 units.

The Greater Dublin area accounts for most of the construction, and the strongest growth is being seen in the commuter counties - Meath, Kildare and Wicklow - where completions rose 119 per cent in the first two months of 2018.

BER registrations in Dublin rose 38 per cent year on year in Jan to february 2018 period, with the county representing 46 per cent of total output.

The majority of the homes being built are semi-detached units, at 42 per cent, with detached homes coming in second at 21 per cent.

The report noted a low rate of apartment construction, with only 234 units constructed between January and February, but new apartment guidelines issued in recent weeks are expected to help density. However, this may also lead to an increase in the price of land.

“In any case, it will take time for these measures to feed through in the form of increased completions,” the report said. “Given current selling prices, it will largely remain a Dublin phenomenon.”

Despite the increase in completions, a pick-up in inward migration flows and an increase in full-time employment has led to a rise in demand for homes.

“In this context, despite the clear momentum, the construction industry is finding it increasingly difficult to close the gap between supply and demand,” the report said. “With record low level of stock for sale and rent, ongoing price rises are the inevitable result.”