Housing starts, one of strongest indicators of future supply, rose significantly in January, suggesting the impact of construction inflation may be moderating.
Commencement notices for the construction of 2,108 new residential homes nationally were received by the Building Control Management System (BCMS) last month.
The Department of Housing, which publishes the data, noted that this was the highest number of commencement notices received in the month of January since the data series began in 2014.
The monthly total was an increase of 17.4 per cent on the preceding month and 13.3 per cent on the same month last year.
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The department noted that over the past 12 months (from February 2022 to January 2023) commencement notices for 27,204 new homes were received. “Supply, which is key to improving our housing market, is increasing,” it said.
To the end of December, more than 56,000 homes were either commenced or completed, the department said, while noting the number of completions in 2022 (29,851) was greater than the total for any full year since the Central Statistics Office completions series began.
[ Construction activity slows as contractors struggle to secure new ordersOpens in new window ]
“Through Housing for All, the Government is working to increase capacity, innovation and productivity in the construction sector,” the department said. “The number of construction sector workers is increasing. It is also taking long-term reforms of the housing and planning systems,” it said.
The Government’s Housing for All plan promises up to 33,000 units a year out to 2030.
John McCartney, director and head of research with BNP Paribas Real Estate, said: “Commencements slowed somewhat between April and October last year as rising construction and financing costs, combined with economic uncertainty, eroded builders’ confidence.”
“However, the story has evolved since then and commencement notices have risen strongly year-on-year in each of the last three months,” he said.
[ Irish house price growth slows to 7.8% as market continues to coolOpens in new window ]
“The rebound in commencements reflects a slowdown in construction inflation and a range of recent policy measures which underpin builders’ confidence that they will be able to sell properties for higher prices when built,” Mr McCartney said.
“These include the relaxation of mortgage-lending rules, the lifting of price caps on the First Home Scheme, the raising of income eligibility criteria for social housing support and the introduction of the new renter tax credit,” he said.
Mr McCartney said the BNP Paribas Real Estate Ireland Construction PMI for January showed that input price growth had retreated to a two-year low. Meanwhile, new order books stabilised, hiring resumed and 85 per cent of building companies expected to be as busy, or busier, in 12 months’ time, he said.
