Modest rise in housing supply but still well below target level
Study by Property Industry Ireland suggests construction rate failing to meet demand
PII calculates that house completions for the year will only amount to about 14,000, well below the Government’s target of 25,000. Photograph: Alan Betson/The Irish Times
The number of new houses constructed in the State rose by 17 per cent to 3,498 in the second quarter of 2016, according to a report from Property Industry Ireland (PII), the Ibec group representing the sector.
Despite the increase, PII predicts that completions for the year will only amount to about 14,000, well below the Government’s target of 25,000, which is necessary to meet the current level of demand.
The PII’s latest quarterly Property Watch report, compiled in association with AIB and DKM Economic Consultants, indicated that new housing starts increased by 33 per cent, to 3,065. But, again, this was off a low base.
Dublin continued to record the highest level of commencements in Ireland, accounting for 28 per cent of the national total.
The report also noted the level of transactions recorded in the Property Price Register rose to 10,928 in the second quarter, up 19 per cent on a quarterly basis.
Of these transactions, Dublin accounted for just over 30 per cent of the total, while both Carlow and Monaghan accounted for the lowest shares: both were up only 0.8 per cent.
Loan approvals up
The report highlighted a sharp uptick in loan approvals for house purchases, which rose by 58 per cent, while the less numerous top-up/remortgage loan approvals were 60 per cent higher.
While the research pointed to modest annual price rises of 7 per cent nationally and and 5 per cent in Dublin over the previous 12 month, the rental market was exhibiting a much sharper acceleration.
The report pointed to Daft.ie’s analysis for the period, which suggested that rents in Dublin and across the rest of the country rose by 4 per cent during the quarter compared with the previous three months.
“The housing challenge continues as supply edges upwards,” DKM director Annette Hughes said.
The modest growth in house completions to under 3,500 units nationally shows the scale of the housing supply challenge when set against the targets in the Action Plan for Housing and Homelessness, she said.
Ms Hughes said the most worrying trend was the rise in rents, which posed a serious threat to Dublin competitiveness.
In the commercial space, the report pointed to Dublin office vacancy rates falling but with significant variation across regions, while the supply shortage in the Dublin market is expected to continue to push rent up in the second half of the year.
The report also noted that prime rents in Dublin are now the eighth most expensive in Europe.
The IT and pharma and health sectors accounted for the largest proportions of the total commercial take-up, with the five largest deals coming from these sectors.