Construction BUSINESS

A recent report by broker Goodbody sheds light on the challenges facing the Irish housebuilding industry, emphasizing the need for increased scale and efficiency to address the housing crisis effectively. According to Goodbody’s chief economist, Dermot O’Leary, the lack of scale among Irish housebuilders remains a significant issue, with many operating on a small scale and building relatively few homes each year.

The report underscores the dominance of a few key players in the industry, with the top 10 Irish housebuilders responsible for a third of all housing starts last year. However, unlike in the UK, where the top 10 builders accounted for 42% of housing commencements, in Ireland, this figure drops to just 21%, highlighting the fragmentation within the sector.

Of particular concern is the relatively low output of the top 10 builders, with the 10th largest homebuilder commencing just 250 units last year. This lack of scale poses a significant threat to Ireland’s ability to meet its housing requirements in the coming years, especially given the ambitious targets set by the government under its Housing for All flagship program.

The report also draws attention to the changing dynamics of housing construction in Ireland, with apartment building accounting for a growing share of total housing output. In 2023, apartments comprised a record-high 36% of total home completions, while the proportion of new builds categorized as one-offs reached an all-time low of 17%.

These findings align with recent warnings from the Economic and Social Research Institute (ESRI), which highlighted the need for increased housing supply to accommodate a growing population and economy. The ESRI suggested that the government’s National Development Plan might need to be revised to address the heightened demand for housing, alongside other essential services like healthcare, education, and transportation.

Despite a significant increase in housing completions in 2023 compared to pre-pandemic levels, the report cautions that housing output is still failing to keep pace with demand. This underscores the urgent need for concerted efforts to boost construction activity and streamline regulatory processes to facilitate greater housing delivery.

As Ireland grapples with the ongoing housing crisis, the insights provided by the Goodbody report serve as a timely reminder of the challenges ahead and the imperative for coordinated action to ensure adequate and affordable housing for all citizens.

Source: Irish Examiner