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Surge in Irish Housebuilding

The Business Post ran an interesting analysis this week of home building across the country and the data reveals a notable surge in housebuilding activities. This surge has been attributed to developers trying to get in under the wire of the development levies waiver. This exemption, designed to ease some financial pressures associated with the construction and delivery of new homes, has undoubtedly influenced project starts in the first three months of the year, which bodes well for the market.

An in-depth analysis by Goodbody highlights this period of disproportionate growth, particularly emphasising a remarkable doubling in apartment constructions year-on-year within the first quarter. While driven by the impending closing of the Temporary Development Contribution Waiver Scheme, which provides relief from development levies, we welcome any catalyst for increased housing delivery. To qualify for this waiver, developers must start their housing projects before a specified deadline, with a completion target set for the end of December 2025. The urgency induced by these timelines has resulted in a 67 percent increase in housing commencements compared to the same period last year, with the construction of new units in housing estates and apartment buildings rising by 56 percent and 107 percent respectively. This pronounced upswing in construction activity, particularly with apartments making up 41 percent of the housing starts in the first quarter, indicates a shift towards denser residential development. Q1 2024 has seen the commencement of an estimated 12,297 units, which pushes the total number of homes delivered over the past 12 months to approximately 38,000; a figure that surpasses both expectations and current governmental targets.

As mentioned, Dermot O’Leary, Goodbody’s chief economist, has directly linked this surge to the impending closing of the levy waiver period, and has advocated for its extension based on its demonstrable success in driving construction activity. 

The impact of the scheme is particularly pronounced in the Greater Dublin Area, where 59 percent of the new starts were located, and in Dublin, a significant 68 percent  of commencements were for apartment projects. Interestingly, the south-west region experienced the highest percentage growth in new housebuilding activity, with construction starts soaring by 140 percent.

This period of accelerated construction comes at a critical point for the Irish market, as an earlier report by Goodbody highlighted the need to increase annual housebuilding outputs beyond 50,000 new homes to meet the growing demand. However, challenges remain, notably the construction sector’s current capacity limitations. The make-up of the homebuilding industry, with a predominance of smaller homebuilders, is cited as a challenge. The top ten residential developers, for instance, were responsible for a mere 32% of the total construction commencements in Ireland in 2023, a figure that contrasts with the more consolidated industry landscape in the UK. Within Lotus Investment Group, we have always seen this as a strength of the industry and the source of our often called-upon resilience. 

Important note: In light of these figures, the Taoiseach Simon Harris is reportedly considering the extension or renewal renewal of the waiver scheme. We will keep a watching brief. 

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group