The government is expected to miss its housing targets in 2023 and 2024, according to consultancy EY.
While housing completions are expected to be 400 units above target this year, an EY report projects shortfalls of 2,000 units in 2023 and 1,450 in 2024.
The government’s Housing for All plan calls for 24,600 completions in 2022, 29,000 in 2023 and 33,450 in 2024.
But rising costs, planning delays, land issues and competition from residential construction are all affecting the supply of new homes, according to the EY Economic Advisory report for Euroconstruct.
Annette Hughes, director at EY Economic Advisory, said “a lack of services and other infrastructure” is preventing building permits from being converted into completions.
According to the Central Statistics Office (CSO), a total of 42,991 units received planning permission last year, 60 percent of which were apartments.
A recent study conducted by the Urban Land Institute found that there is not enough demand for the number of suburban apartments to be built, as young buyers prefer city apartments and duplexes.
The news comes after construction activity slowed again in May, with rising costs for metals, fuel and subcontractor fees weighing on businesses.
Rising prices are hurting customer demand and business confidence, BNP Paribas Real Estate Ireland said, with three in four firms reporting an increase in costs this month.
The index of construction activity of BNP stood at 51.5 in May, after 52.5 in April. Anything over 50 indicates an increase in activity.
Residential activity grew faster than other sectors, with the index coming in at 56.6, while commercial activity slowed to 52.2 and civil engineering declined. New orders also fell for the second straight month, while business confidence was at its weakest since October 2020.
“Cost pressures” were the main reason for the slowdown, according to survey participants, who said customers are postponing projects until prices start to come down.
Copper, fuel and oil saw the biggest price increases, according to companies, and subcontractor prices rose at an all-time high.
According to the EY report, construction price inflation is expected to average 10 percent in 2022 and 6 percent in 2023, before falling to 4 percent in 2024.
Despite rising prices, the report forecasts construction output to rise 4.9 percent in 2022, 4.1 percent in 2023 and 5.4 percent in 2024.
BNP Paribas said the rate of construction job creation accelerated in May to the fastest pace since January, while buying activity also picked up.
John McCartney, director and head of research at BNP Paribas Real Estate Ireland, said the war in Ukraine and Covid restrictions in China were causing costs to rise, but said “the overall picture remains broadly positive”.
“Construction activity has continued to pick up over the past month, particularly in the residential sector. In addition, construction companies remain quite optimistic about the future,” he said.
“From the data alone, contractors have been able to pass some of the higher input costs on to consumers and are confident this will continue.”
https://www.independent.ie/business/irish/government-to-miss-targets-on-housing-construction-ey-report-41745537.html Government ‘missing targets on housing’ – EY report