House starts fall sharply on 2006

House completions in the three months to the end of September were down almost a quarter on the same period of 2006, with housing starts falling even more sharply.

Figures published yesterday by the Department of the Environment show that 6,362 units were completed in September, bringing the total for the quarter to 17,427. This compared with a total of 22,571 in the third quarter of 2006. In the nine months to the end of September, 56,405 houses were completed, down from 66,470 in the first three quarters of 2006.

Separate housing commencement figures, also released by the Department of the Environment, show that 46 per cent fewer houses were started in the three months to the end of August than in the same months of 2006.

Dermot O'Leary, chief economist with Goodbody Stockbrokers, said the figures pointed to a "depressed" outlook among builders.

"Given the indications from the market that the housing stock is clearing at a very slow pace, it is likely that appetites for commencing new projects will remain weak," said Mr O'Leary.

In this context, he added, there are "downside risks" to his 2008 house completions forecast of 60,000 units.

The latest housing commencements data shows that 3,254 houses were started in August, down from a peak of 5,782 in January. In the eight months to the end of August, 38,465 houses have been started, according to the Department of the Environment data.

The outlook for housing activity is key to most commentators' forecasts for the economy this year and next. Earlier this week, the Minister for Finance, Brian Cowen, said 2007 was a "turning point" for the economy, with lower residential output to influence overall growth rates.

"Risks are increasing for 2008," said Mr O'Leary yesterday.

For 2007, Mr O'Leary expects 75,000 house completions.

"Some 56,000 were built in the first nine months and our Q4 forecast assumes a drop of 32 per cent year on year. We are comfortable with the 2007 estimate," he said.