BNP Paribas Real Estate economist casts doubt on bankers’ predictions for new-home delivery

“Doctors differ and patients die.” That was the reaction from John McCartney, head of research at BNP Paribas Real Estate, to this week’s estimates from the Banking and Payments Federation Ireland (BPFI) and the Central Bank of Ireland that housing completions will reach 35,000 this year, a year-on-year increase of 7 per cent on 2023, and more crucially, some 400 units more than the Government’s target of 34,600 new homes.

But while such predictions might be music to the ears of Minister for Housing Darragh O’Brien and his colleagues as they stare down the barrel of the electoral gun that’s pointing in their direction in early 2025, McCartney is more pessimistic in relation to the immediate prospects for housing output.

Responding in a LinkedIn post to the BPFI’s and Central Bank’s analyses, he said: “Given construction lead-times, is the annual run-rate of commencements in January a good predictor of completions for the remainder of this calendar year? I would argue the more relevant figure is the run-rate in the second half of 2022 and first half of 2023. This was as much as 26 per cent below where it now stands.”

[ House building in Ireland is at a 15-year high. This is true but it is also Government spin ]

And as if that wasn’t enough to rain on the Minister for Housing’s parade, he added: “I would also argue that the best guide to completions is not commencements, but the number of dwellings under construction. Because we have been finishing homes faster than we have been starting them, this number has fallen sharply over the last 18 months. The number of units on-site in Dublin fell from 18,630 in the second quarter of 2022 to 15,385 in the third quarter of 2023, and to an estimated 15,191 in the fourth quarter of 2023 – an overall drop of 18.5 per cent. Is this not likely to be reflected in reduced 2024 housing completions?”

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Given that evidence McCartney proclaimed that “I’m sticking to my guns” on the Government’s housing target for 2024 being “at risk”.

Happily, at least for whichever parties are in power after next year’s general election, McCartney concluded by saying “we can agree at least that the longer-term trend for housing completions beyond 2024 is upward”.