Delays in home completions impacting growth in the mortgage market
Same Period In Of According Pared 12,370 Half Decrease Units During Units Over This 9% Year Cso, The A With Were First Pleted The Period The 13,923 The Housing 2023, In To
Delays in housing delivery could have an impact on growth in the mortgage market, the Banking and Payments Federation, Ireland (BPFI) has said, as the volume of mortgages drawdown fell 9% during the first six months of the year, while the number of home completions also declined.
In its latest Housing Market Monitor, the BPFI said between January and June there were 18,529 mortgage drawdowns valued at €5.2bn — this is down 9% in volume terms and down 7% in value.
The decline was evident in both the home purchase and switching segments, with most of the decline taking place during the first three months of the year.
In terms of mortgage approvals, 29,421 were recorded during the first seven months of the year — a 2% decline in volume terms. These approvals were valued at €8.7bn.
The BPFI said homebuilding seemed to have “stalled” during the first six months of the year.
BPFI chief executive Brian Hayes said the “majority of this decline is accounted for by the decrease in apartment completions”.
“While the proportion of apartments being built has risen in recent years, increasing from 16% of all completions in 2019 to over 35% in 2023, they take longer to complete compared to housing schemes so we may see delays in the expected increase in total housing units completed in 2024,” he said.
According to the CSO, 12,370 housing units were completed in the first half of this year compared with 13,923 units during the same period in 2023, a 9% decrease over the period.
The number of units completed across single house, scheme house and apartment segments have all declined during this period. The majority of the decline is accounted for by the decrease in apartment completions in Dublin, where activity fell by over a quarter so far this year.
However, housing commencements are up dramatically this year, with construction beginning on 35,358 units during the first seven months of the year compared to the same period in 2023.
In the 12 months to the end of June, a total of 31,398 homes were completed compared with 30,393 units completed in the prior-12 month period.
BPFI chief economist BPFI Dr Ali Uğur said while mortgage activity “remains strong” the delays in housing delivery “could have an impact on the growth rate in the mortgage market”.
“The increase in homebuilding seems to have stalled in the first half of 2024, but output is expected to increase in the second half of the year, with annual number of completions to be at or above the levels observed in 2023," he said.
“In addition, commencement activity points to further increase in output in the short term, however, with the share of apartments increasing, it is likely that we may see delays in the expected increase in total housing units."
The report also noted 38% of Irish adults had received a substantial gift or inheritance and about one third of those used it to help them buy or build their own home.
“This means that nearly 13% of Irish adults have used a gift or inheritance to help them buy or build their own home,” Mr Hayes said.
In terms of future expectations, 35% of Irish adults expect to receive a substantial gift or inheritance in the future.