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May 2024: Real Estate and Construction Update for Ireland’s Home Builders

With no fewer than four separate industry reports issued over the past four days, there is a lot of data to interpret and understand this week.

As noted last week, the Irish construction and real estate sectors are experiencing a notable shift, some of the trends emerging are positive, and some less so. The data points to significantly increased construction activity and rising house prices, despite prevailing economic pressures. 

Looking firstly at the (unexpectedly?) persistent rise in house prices, the Central Statistics Office confirmed that house prices in Ireland have climbed by over 7 percent in the past year, with the national average home price now standing at €333,000. Interestingly, these increases persist even amid ongoing cost-of-living challenges. Dublin’s Blackrock area ranks as the most expensive eircode, with an average price of €720,000, while Castlerea in County Roscommon remains the most affordable, with homes averaging €135,000. What homebuilders and intending home builders will be interested to note is the robust demand for housing right across the country, albeit at varying price levels. 

Reinforcing the indications from data released in Q1, the construction sector is experiencing its fastest growth in over two years, driven by both residential and commercial projects. The BNP Paribas Real Estate Ireland construction total activity index indicates a consecutive monthly expansion, with significant rises in new orders, employment, and input purchases. 

In terms of new developments, the market is seeing a rise in apartment buildings and increased/renewed investor interest in student accommodation. According to Deloitte’s annual Crane Survey, over 32,000 residential units were completed in 2023, with apartments constituting a significant portion. 

There is little doubt that Government incentives like the development levy waiver and the water charge refund have notably spurred these developments; and while we welcome the 11th hour reprieve, this is a poor way to make policy.

The industry deserves and demands better…

Goodbody Stockbrokers also reported on the surge in housing commencements, with the nearly 18,000 in April alone marking a post-crash record. This spike may be partly attributed to the extension of government waivers and rebates mentioned above. The point was made that it remains uncertain how many of these commencements will translate into actual completions; however, ensuring these completions ought to be every actor’s priority right now. Every single new home is required as Ireland strives to meet its current target of 50,000 new homes per year and, if the recommendations of the Housing Commission are adopted by the Government, this target could rise to 80,000 new homes per year. 

While we genuinely believe in the capacity of our clients and the wider industry to scale, particularly with the massive increase in the adoption of offsite and other modern methods of construction, the State needs to address systemic challenges. Planning might well be at the top of the list, however, there are many other challenges to delivery, including workforce availability, utility connections, energy and, critically, infrastructure for renewable energy projects.

As befitting of the stage of the political election cycle that we are currently in, there is ‘A lot done. A lot still to do..’. 

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group