Number of home completions expected to reach 27,000 next year

Goodbody report revises upwards its expectations following surge in commencements

The deadline for returning updated Local Property Tax valuations to the Revenue Commissioners on November 7th. Photograph: iStock

The deadline for returning updated Local Property Tax valuations to the Revenue Commissioners on November 7th. Photograph: iStock

 

The number of home completions is expected to reach 27,000 next year and 31,000 the year after, according to a new report by Goodbody, although the figures are still below what is required to meet demand.

Goodbody said it was increasing its forecast for 2022 from a previous estimate of 23,000 on the back of a “surge in commencements”, while it had not previously disclosed its expectations for 2023.

The figures are still below an estimate contained in a Central Bank report published before the onset of the Covid-19 pandemic which suggested about 34,000 homes will have to be built each year for the next decade just to meet demand.

The Goodbody report noted there are “clear cost pressures in the sector” due to labour and materials, but said demand conditions “remain strong”.

“Home prices continue to rise, and Government policy is supportive through homeowner supports and increased public-housing output,” it said.

Pandemic

Following a period of significant volatility since the start of the pandemic, housing completions were “relatively stable” in the third quarter of this year, according to the Goodbody Analytics BER Tracker.

“We estimate that home completions fell 4 per cent year-on-year to 4,900 units in the third quarter and were down 14 per cent compared to the third quarter of 2019.”

Dublin was the strongest performing region, up 61 per cent year-on-year, which Goodbody said was “a function of the ongoing growth in apartment construction”.

“With 14,000 housing units completed in the in the year to date, our supply forecast for 2021 remains relatively unchanged at circa 22,000,” it continued.

“A boom in housing commencements has been the standout feature of the post-lockdown housing market in Ireland. There were 18,000 commencements between April and August 2021, taking the 12-month total to 33,000.”

Nationally, commencements are up 21 per cent in the year to date compared to 2019, and up 60 per cent year-on-year.

Greater Dublin (+27 per cent) is contributing most to the national trends, but growth in other regions such as the midwest (+48 per cent), Border (+42 per cent) and the midlands (+33 per cent) shows that most of the country is seeing a healthy rebound.

Goodbody said it was also revising its house price estimates for 2021 “upwards significantly” on the back of the momentum seen over the summer where annualised price growth has reached over 20 per cent.

“We now expect prices to rise by 12.5 per cent in 2021 and by a further 5 per cent in 2022 and 4 per cent in 2023,” it said.

Mortgage approvals

“Record low levels of stock, combined with a surge in mortgage approvals and a structural shift in geographical demand is supporting this outcome.

“Higher housing output and prices feeds into our updated mortgage forecasts. Following growth of 25 per cent this year, we expect gross lending to increase to €11.8 billion (+12 per cent) in 2022 and to €13 billion in 2023.”