Impact of lockdown on housing output less than initially feared, says Goodbody

The impact of lockdown on housing output has been less than expected, according to Goodbody Stockbrokers.

Using building energy rating (BER) data, the company estimates about 4,000 residential units were completed in the first quarter of 2021.

This was 20 per cent down on the same period last year. However, the decline was less than what had been predicted and less than what occurred during the first lockdown last year.

As a result, Goodbody predicted house completions for the year would be about 21,000 units, the same as last year.

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In its most recent analysis, the Economic and Social Research Institute predicted the restrictions on construction would see the supply of new units fall to 15,000 this year.

Supply

The Irish Home Builders Association forecast an even bigger reduction with supply falling to as low as 13,000.

"Lockdown impacted housing completions in Ireland in Q1, but not as badly as feared," Goodbody chief economist Dermot O'Leary said.

“The reduction in housing starts will result in a flatter path for completions over the coming years, with an expected increase to 23,000 units in 2022 heavily reliant on completions of apartments currently in construction in Dublin,” he said.

“This still leaves output well below our estimated demand levels of 35,000 per annum,” he added.

On January 8th, all non-essential construction sites were ordered to close, with the exception of social housing and some private homes which were near complete. The industry reopened on a phased basis in April.

The Goodbody report showed Dublin was the worst hit, with residential completions down 39 per cent year on year in the first quarter. This took the fall in the most recent 12 months to 24 per cent .

Goodbody also cited data from the Department of Housing which showed that commencement notices of new builds continue to be affected more by the lockdowns associated with the pandemic.

Commencements

In the three months to February, housing commencements fell by 50 per cent year on year. Dublin has seen the largest decline, with a fall of 40 per cent in the 12 months to February.

Commencements in Dublin’s commuter counties fell by 34 per cent over the same period, while outside the greater Dublin area commencements were down 21 per cent.

This points to a “lingering impact” from the pandemic, it said.

Apartment construction was most heavily impacted by lockdown, with completions down by 25 per cent in the first quarter.