Housebuilding rate is ‘well below official figure’

Housebuilding activity in Ireland is “substantially below” what official data suggests, according to a new report casting further doubt on the accuracy of Government figures.

Based on building energy ratings, the Goodbody BER housebuilding tracker shows 5,377 houses were completed in 2016. This compares to 14,932 completions indicated by official data, which derives from electricity connections.

Goodbody’s analysis show that while the number of houses being built is improving, supply still has considerable distance to go to meet current and future demand.

Publication of the new monthly indicator comes as the latest MyHome property report shows the market is on track to record double-digit price growth for this year and into 2018.

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An official review into the accuracy of completion figures was recently established following publication of a number of studies that question official figures.

Little relationship

Experts claim the official figure for house completions bears little relationship to the number of new homes being built. This is because it is based on ESB meter connection data, which typically overstate the level of new builds, reflecting the fact that new electricity connections can be triggered by work to existing buildings, or by formerly vacant units coming back on stream.

The data also include recently completed but unoccupied Nama developments and former ghost estates, some of which were built more than a decade ago.

According to the latest Goodbody tracker, in the year to August, 5,393 units were completed, up 77 per cent versus the previous year but coming from a low base.

Goodbody said on current trends, “completions will total less than 10,000 units, roughly half the estimates suggested by the alternative electricity connections data”.

“Further actions are needed by government to address what is an even more acute housing shortage that we thought,” said Dermot O’Leary, chief economist at Goodbody. “Annual supply needs to grow to 35,000 to meet demand in our opinion.”

Cast doubt

This compares with a need for up to 50,000 new homes per year, according to a recent report from Davy, which also cast doubt on official housebuilding activity figures.

According to Goodbody, more than two-thirds of the new homes completed over the last 12 months were in the greater Dublin area, which comprises Dublin, Wicklow, Meath and Kildare. Semi-detached homes remain the most popular type of new build, accounting for 41 per cent of new completed in the year to data.

Apartments, of which there is a dire shortage in Ireland, accounted for just 13 per cent of new builds, but as much as 28 per cent of units in Dublin city.

In terms of stock, apartments currently make up just 12 per cent of housing stock in Ireland, against an EU average of 50 per cent.

Terraced homes accounted for 23 per cent of new builds, followed by detached units at 21 per cent.