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In view of the cost crisis and economic uncertainty, the construction slump threatens to slow down the supply of housing

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A construction slowdown threatening the pace of future housing supply has worsened over the summer, new industry data shows.

The Uly construction Purchasing Managers Index (PMI) points to an accelerating contraction in Irish construction activity, according to the latest regular research from BNP Paribas.

The numbers suggest builders are reacting to construction costs and general economic uncertainty by slowing down new projects, even as this year’s completions rise.

The numbers point to a slowdown in all major construction sectors – residential, commercial and civil.

There’s no sign of activity already underway slowing and employment levels flat, but builders are increasingly expecting next year to be less busy than 2022. That’s particularly bad news for housing supply, where production is still far off below the level required to meet annual demand or to make up for a decade of undersupply.

John McCartney, director and head of research at BNP Paribas Real Estate Ireland, said a sharper decline in July compared to June reflected several factors, including higher costs impacting plans’ profitability, as well as the fast pace in the first half of the year. which can just be hard to hold.

“Based on projects already underway, we expect continued strong residential, office and logistic completions through the end of 2022. However, continued cost inflation means new project starts may struggle to keep up with completions, delaying activity in the longer term,” he said.

On the positive side, while input cost inflation has continued to rise, he said.

Meanwhile, tax incentives to encourage renovations could help free up dozens of apartments currently vacant in city centers, a trade association said.

The Hardware Association of Ireland is demanding that landlords get tax relief so they can rent out the properties.

A June report by the Collaborative Town Center Health Check Group found that commercial property vacancy rates in Ireland are 80 percent for upper floors, almost 20 times higher than in mainland Europe.

Census data shows that half of all landlords in the country had net rental income of less than €10,000 in 2019, with 80 percent earning less than €20,000.

https://www.independent.ie/business/irish/construction-lull-threatens-to-slow-supply-of-housing-amid-costs-crisis-and-economic-uncertainty-41911497.html In view of the cost crisis and economic uncertainty, the construction slump threatens to slow down the supply of housing

Fry Electronics Team

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