Volume of house building still falling despite supply shortages

The volume of construction in Ireland’s residential property sector is continuing to fall despite the acute housing shortages in Dublin and elsewhere.

Figures from the Central Statistics Office (CSO) show the level of residential building in the State fell by 1.9 per cent in the second quarter of this year, the second consecutive quarterly decline.

The figures also show that on an annual basis, residential building has now dropped by 8.8 per cent.

The CSO’s measure is a gauge of activity in the sector and differs from the monthly house completion numbers released by the Department of the Environment.

Nonetheless, it suggests the current level of building and construction in the economy is nowhere near the rate needed to satisfy the current demand for housing.

The recent surge in house prices, most notably in Dublin, has been blamed almost entirely on a chronic lack of supply.

Only 10,000 new homes are expected to be built this year, whereas the Government and the Economic and Social Research Institute (ESRI) believe 25,000 are required every year to meet demand.

Construction Industry Federation director general Tom Parlon said it was “surprising” to see that the level of residential building activity was down for the second quarter in a row.

“At a time when there is a dire need for more housing, we should be seeing an increase in the volume of production, but it has fallen by 7.5 per cent since the end of 2013. This again highlights the problems that exist in the housing market,” he said.

“We are not seeing more houses built because construction companies can’t access finance, they can’t have existing planning permissions altered and the cost of building is still too high due to the levies imposed on new builds.”

“Everyone knows we need more houses. We need to have 25,000 units built a year, but we won’t come close to that in 2014 as these statistics show. The CSO stats won’t start to improve until serious efforts are made to remove the barriers to building and houses can be provided in the areas where they are needed once more,” Mr Parlon concluded.

Overall, the CSO figures indicate the volume of building and construction rose by 4.1 per cent in the second quarter, suggesting recovery in the sector is gathering momentum.

The quarterly rise was down to increases of 9.3 per cent and 4.7 per cent in civil engineering and non-residential building respectively.

On an annual basis, the volume of output in building and construction increased by 10.1 per cent in the second quarter.

The annual rise in the volume of output reflects year-on-year increases of 23.4 per cent and 8.5 per cent respectively in non-residential building work and civil engineering.

The CSO numbers also show the value of construction rose by 5.9 per cent in the second quarter and by 11.1 per cent on an annual basis.