And what this means for home builders
The most recent housing figures paint a more promising picture for home builders than daily media commentary might suggest. Housing Minister, Darragh O’Brien, has expressed his confidence to the Cabinet that the Government’s target for new homes, set at 29,000 this year, is on course to be met or even surpassed, with 14,017 homes already completed in the first half of 2023. This represents a growth of 6 percent from the previous year. In real terms, delivery has hit a post-crash peak.
However, the State’s ambition doesn’t stop at this year’s target. Under the ‘Housing for All’ plan, we need to ramp up the delivery of new homes annually. With the target set to increase to 33,450 homes next year, it is clear that Government policy will need to facilitate increased delivery by the private sector.
The first seven months of 2023 saw the commencement of construction on over 18,500 new homes, a 12 percent increase from the same period last year. The Minister highlighted the consistent and “very strong” growth in housing commencement over the last nine months, backed by a rising trend in granted planning permissions – side note, it was interesting to hear the chief of one of Ireland’s largest home builders comment on radio this week that planning is actually working and that the LRD scheme is functioning well; we would be interested to hear your views on this.
While various forecasts provide a range of projections for new home completions this year, they are all generally optimistic. Non-government predictions place estimates between 27,000 to 30,000 new homes for 2023. Notably, institutions including the ESRI and the Central Bank offer conservative figures of around 27,000 and 27,500 respectively, while BNP Paribas and MyHome are at the higher end of the scale, forecasting close to 30,000 completions.
In terms of market readiness, the Banking and Payment Federation of Ireland’s recent data brings more good news. Mortgage drawdowns by first-time buyers are at their highest levels since 2007. This surge in interest is also supported by a 23 percent increase in first-time buyer mortgage approvals this year. The CSO Residential Property Price Index further complements this trend, showing that around 17,250 homes, of which 5,360 are new builds, were acquired by first-time buyers by June 2023 – marking a 10 percent increase from the previous year.
Lastly, as reported by TheJournal.ie this week, Minister O’Brien confirmed that the promised review of housing targets is currently underway. We expect to know more about this Spring 2024, however, currently expectations are that a comprehensive review should bring adjustments (and perhaps fresh opportunities for industry stakeholders).
Lotus Investment Group