The Central Bank has been “surprised on the downside” by the number of home completions since early last year, and the construction industry will need to increase its workforce by about 30 per cent to hit targets unless productivity improves, the regulator has said.
Just 30,330 homes were completed during 2024, while the Programme for Government pledges to deliver more than 300,000 by the end of 2030.
There were 5,938 new dwelling completions in the first quarter of this year, which was a rise of 2 per cent on the same three months of 2024, but still low in the context of this year’s target of 41,000.
Officials from the Central Bank were before the Oireachtas committee on budgetary oversight on Tuesday for scrutiny on its latest quarterly bulletin. The regulator recently revised down the number of homes it expects to be built this year to about 32,500.
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“That is mainly because of the actual data we’ve seen,” Vasileios Madouros, deputy governor, monetary and financial stability, told the committee. “We’ve been surprised on the downside in terms of completions in 2024 and also the first quarter of 2025.”
Mr Madouros said that if current levels of productivity are not improved, the number of people employed in construction will need to grow by 30 per cent to hit Government targets.
“Construction employment at the moment is around 180,000 people, which is a little bit above 6 per cent of total employment,” he said.
“If current levels of productivity were to remain as they are, to meet the new higher housing needs ... we estimate we would need an increase in construction sector employment of about 30 per cent, which is substantial.
“That in itself could be difficult to achieve. We have seen some reallocation of labour within the construction sector to housing. There is probably limited scope to see much more of this reallocation going forward, which is why productivity is so important.”
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Martin O’Brien, head of the Central Bank’s Irish economic analysis division, said Ireland is about 20 per cent below European averages in terms of productivity.
“If we just got to European average levels of productivity in construction, we would get 20 per cent more output for the same level of labour input,” he pointed out.
“There are a number of factors that contribute to that, [such as] greater adaptation of modern methods of construction.
“Construction firms in Ireland also tend to be very small, and it’s very hard for small firms generally to innovate and engage in adapting to more modern methods of technology.”
He said “anything that can be done” to incentivise firms to invest in the necessary technology and skills they need to be more productive “would certainly help us to reach the kind of levels of housing supply that is necessary”.
