Homebuilding sector sees output drop compared to second quarter
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The volume of building and construction work in the third quarter rose by 4.5% compared to the same period last year, but housing construction output dropped compared to the second quarter.
New data from the Central Statistics Office (CSO) shows that homebuilding activity rose by 4.4% over the year while construction activity in the non-residential sector jumped by 5.7% with a 0.8% rise in the civil engineering sector.
However, on a quarterly basis, home building activity dropped 4.1% compared to the second quarter.
Shane O’Sullivan, Statistician in the CSO's Enterprise Statistics Division, said civil engineering and non-residential sectors both saw quarter-on-quarter growth.
"The seasonally adjusted value index for building and construction rose by 0.9% on a quarterly basis and by 6.5% on an annual basis. Excluding civil engineering, the seasonally adjusted value index grew by 2% on a quarterly basis and by 7.2% on an annual basis," he said.
Separate data from the CSO on home completions show just under 9,000 homes were completed in the third quarter. In the first nine months of this year, 21,643 new homes have been built according to the CSO, 3% fewer than in the same period last year.
It means that home completions this year will likely miss targets set by both the Government and external organisations.
Taoiseach Simon Harris said earlier this year that 40,000 new homes would be completed this year. The Central Bank and the ESRI have both said more than 50,000 homes are needed each year.
Commenting on the CSO data, Ian Lawlor, managing director of Roundtower Capital which backs residential property developments said the quarter drop in activity was disappointing and said he hoped the outcome of the current general election will have a huge positive impact on output.
"There needs to be an exponential increase in the number of houses being built so that young people here have a chance of owning their own home and so that the rate of house price growth is kept in check," he said.
"This can be achieved by reductions in third-party blockages, which will in turn reduce building costs and lead to a substantial increase in new builds.
Mr Lawlor said that whatever the make-up of the new Government is, it needs to be careful not to scare private funders and investors away from the housing market.
"It’s been estimated that up to €20bn is required to deliver the Government’s new target for housing delivery. The State is facing a huge funding challenge in terms of how this estimated €20bn can be delivered. It’s likely that up to 80% of the €20bn required will need to come from the private sector," he said.
A survey of Irish companies in the building sector found a sharp rise in residential activity in October. After contracting continuously through 2023, the housing sub-index from BNP Paribas has now been stable or rising for the last nine months.
However, the rate of expansion accelerated sharply in October. Deadlines to avail of the development levy waiver and the water connection charge refund drove sharp spikes in the number of commencement notices filed in April and September respectively.