New housing construction increases but market still ‘depressed’

The number of construction notices for new housing reached 8,000 in 2015, up 19 per cent on the previous year, according to a report from Property Industry Ireland (PII), the Ibec group that represents the sector.

However, this was off an extremely low base and encompassed a slowdown in the final quarter of 2015 suggesting residential market activity remains depressed, the report noted.

The group’s report is a joint initiative by AIB and DKM Economic Consultants and is based on 30 different property datasets.

It shows housing commencements declined to less than 1,800 in the final three months of last year, despite gaining momentum in previous quarters.

It also noted that annual property price inflation in the rest of Ireland surpassed the rate in Dublin for the first time since the crash.

The demand for office space accelerated in the latter half of last year, while significant development remains in the pipeline in contrast to the residential end of the market.

The average industrial take-up of over 400,000 square metres in 2015 was the highest since 2006.

Demand for retail space is spreading out from prime city areas driven by demand from both domestic and international retailers, the report said, noting the year concluded with transactions worth over €1 billion in the final quarter.

"This report is issued in a period of huge political uncertainty. Whatever format the new government takes, resolving the housing crisis should be at the top of their agenda," PII's Peter Stafford said:

“There is no doubt that activity is increasing in the Irish property sector. Whether the measure is residential sales, commercial property investment or house-building, the indicators look more positive than they have done in the past.”

“ Nonetheless, there is much still to be done if the Irish property sector is to play its part in delivering real economic growth, attracting further investment into Ireland and ensuring an increased supply of high quality, affordable housing.”

Annette Hughes, director of DKM said: “The data show that there is clear evidence that the property market embarked on a new phase of its cycle in 2015, as the strong economic recovery and the limited supply of new development across the property sector as a whole boosted take-up levels and rents.”