Labour needed to deliver on surge in housing commencements 

Despite a surge in the level of home commencements through the start of this year, additional labour capacity may be needed to ensure they are delivered, the Banking and Payments Federation Ireland (BPFI) has said.

During the first five months of the year, there has been a surge of home commencements with over 32,000 units beginning construction compared 32,800 units across all of 2023.

This is largely as a result of over 18,000 commencements being recorded in April. This dropped to just under 2,000 during May.

However, the BPFI said that this was possibly due in part to the expected end of the waiver on development contributions and rebate on water charges. These were extended in May to the end of this year for qualifying housing works completed by the end of 2026.

Overall, 42% of these commencements were for apartments with the BPFI suggesting this indicates a potential longer lag between overall commencements and completions.

Labour capacity

In the BPFI’s latest housing market monitor, its chief economist Dr Ali Uğur said for the construction sector to be able to deliver output levels in line with the commencement activity that is taking place “labour capacity may need to increase”.

“It is likely that some of the skilled labour required for this increased level of output can be transferred from other parts of the construction sector, such as office construction, where activity seems to be declining.”

He added that current indicators show that house building activity remains robust especially with commencements at record levels.

“On the demand side, declining overall inflation levels contributing to a more positive outlook for disposable incomes, supportive demographic trends and government fiscal supports for prospective FTBs are likely to sustain high levels of housing demand,” Dr Uğur said.

The number of people employed in the construction sector increased to 171,000 during the first three months of the year.

However, the latest data shows that during the first three months of the year the number of completions was down from 6,647 to 5,841 and the number of planning permissions granted is also down 28.1% to 8,387.

The drop in completions was mainly driven by the fall in the level of apartment completions which, at just over 1,600 units, were down by nearly a third from the first quarter of 2023.

Scheme houses accounted for 52% of the completions between January and March with Dublin alone accounting for nearly a third of all completions as well as over 77% of apartment completions.

Dr Uğur said there was also evidence of slowdown in the housing and mortgage market activity during the first three months of the year where the number of property transactions, mortgage approvals and drawdowns were all down compared with the same period a year ago.

Mortgage approvals between January and March were down 8.4% with mortgage drawdowns down nearly 20%.

The total value of the mortgage drawdowns stood at €2.3bn. 

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