More homes being built than forecast as construction activity rebounds

THE number of homes built this year and next is set to exceed previous projections following a surge in commencements.

There could be as many as 27,000 housing units completed next year, according to Goodbody Stockbrokers.

Some 14,000 housing units have been completed so far this year, with the total for the end of the year expected to be 22,000.

Estimates at the start of the pandemic were for just 13,000 housing units being constructed this year.

Chief economist with the stockbroker Dermot O’Leary projects that for 2023 some 31,000 housing units will be completed.

However, the revised totals are below a Central Bank estimate from before the pandemic that said around 34,000 homes will need to be built every year for a decade just to meet demand.

Mr O’Leary wrote in a note to investors: “On the back of the surge in commencements, we are increasing our home completions forecast to 27,000 (from 23,000 previously) for 2022 and publishing our 2023 forecast for the first time, where we expect 31,000 completions.”

He added that there are what he called clear cost pressures in the sector due to labour and materials costs.

But demand conditions remain strong, home prices continue to rise, and Government policy is supportive through homeowner supports and increased public housing output.

Goodbody said a boom in housing commencements has been the standout feature of the post-lockdown housing market.

There were 18,000 commencements between April and August this year, taking the 12-month total to 33,000.

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

The Greater Dublin are is seeing much of the building activity, but other areas are also seeing strong growth. These include the Mid-West, the Border area and the Midlands.

Mr O’Leary said this meant that most of the country is seeing a healthy rebound.

Builders have to inform local authorities a month in advance of when they are about to start construction, and usually cannot delay the process once they have done this.

In 2019, before the pandemic, some 26,500 completion notices were issued.

The new projections for this year are in line with those of Davy Stockbrokers where economist Conall Mac Coille said earlier this month he expects there will be 22,000 housing units completed this year.

By next year, completions could hit 30,000, Davy said.

Goodbody’s Mr O’Leary now expects house price growth to be even higher this year.

Property prices were up 11pc in the year to August, the fastest rate of increase in three years, the most recent figures from the Central Statistics Office show.

But Mr O’Leary expects prices to rise by 12.5pc this year, and by a further 5pc next year, before fall back to a rise of 4pc for 2023.

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

This will lead to mortgages worth almost €12bn being issued next year, rising to €13bn in 2023.