Home completions exceed government targets, reaching 28,000 by the end of the year

According to a study by BNP Paribas Ireland, Irish construction activity fell for the second straight month in November as inflationary pressures and price increases weighed on demand.

However, by the end of the year, 28,000 completed homes are on track to exceed government targets.

The Bank of France’s Construction Activity Index for Ireland showed the pace of the contraction in housing activity accelerated over the past month. Business activity was also impacted in November, according to the report, but only slightly.

This overall drop in activity was attributed to a drop in new orders and a general market slowdown amid continued increases in input costs.

New business fell for the eighth straight month, with declines now the sharpest since August. As a result, construction companies in Ireland have sought to reduce their current inventories and companies have cut their purchasing activity by the most in three months.

Inflation continued to be a concern, with nearly half of the 150 Irish builders surveyed reporting further price increases during the month. Other areas impacting operations were rising energy costs and fuel prices.

Supply chain disruption remained a challenge for many, with lead times rising again over the past month.

Firms also tried to scale back hiring activity, with employment levels flat in November after three months of expansion.

Sentiment was also divided among companies in the industry, with some raising concerns about the possibility of a broader economic downturn and the resulting impact on jobs. However, other companies in the sector were optimistic that existing housing demand would support growth in the coming year.

Subcontractors remained in demand, with the number increasing the most since February, according to the report.

BNP Paribas Real Estate Director and Head of Research, John McCartney, said the bank’s estimate of 28,000 projected home completions for 2022 should be met.

He expects next year’s completions to be “broadly” similar to this year’s numbers based on index analysis. However, he pointed to the number of freshmen entering the university, which fell 14 percent year-on-year in October.

“It has the potential to pull from housing output later in 2023 and certainly into 2024,” McCartney said Irish Independent.

“As of this writing, given the amount of units already in the pipeline, my belief is that next year will be consistent with this year.”

However, he pointed to a number of government initiatives aimed at alleviating the profitability problem and said a slowdown in construction activity was “not inevitable”.

These include the First Home shared-equity program for first-time buyers and the Croí Cónaithe municipal housing program.

“Another thing that I think could also help is the easing of mortgage rules, which won’t come into effect until January,” he added. “That will allow people to borrow more money to pay the higher prices that our builders say are necessary to make construction profitable.”

https://www.independent.ie/business/irish/house-completions-to-exceed-government-targets-by-reaching-28000-by-end-of-year-42212270.html Home completions exceed government targets, reaching 28,000 by the end of the year

Fry Electronics Team

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