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Housing to fall short of demand this year despite boost to supply

The construction sector output will be worth €32bn

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The higher pace of completions still won’t be enough to keep up with demand for 35,000 homes

The higher pace of completions still won’t be enough to keep up with demand for 35,000 homes

The higher pace of completions still won’t be enough to keep up with demand for 35,000 homes

The number of new homes completed this year will exceed the Government’s forecast of 24,600 units , thanks to a sharp rise in housing starts last year, according to an analysis by infrastructure consulting firm AECOM.

While delivery of new homes is expected to be well up on recent years – unless there are fresh lockdowns or restrictions – it will still be short of demand – which expert consensus puts at around 35,000 units per year. 

AECOM says the euro value of construction work in Ireland will approach Celtic Tiger levels this year underpinned by around €11bn of Government-funded capital investment but due in part to inflationary pressure. 

The analysis says Ireland’s construction sector is set to grow by more than 18pc to €32bn of projects this year.

That spend is just €6bn short of levels recorded at the height of the Celtic Tiger but in reality output remains well below pre-crash levels once key measures like employment and completions are factored in.

The average number of people employed in construction rose from to 146,000 in the third quarter of 2021 and that figure is expected to increase this year. 

AECOM said the industry will be under pressure to attract enough workers. More than 200,000 were employed in the boom years for the industry.

A shortage in skilled labour for key trades is a problem that pre-dates the pandemic but has been exacerbated by Covid-19, the report said.

Outside of housing the report identifies demand for new pharmaceutical, medical devices and data-centre sector buildings driving activity over the next 12 months.

AECOM says there is significant pressure on the construction sector to rapidly expand output to meet targets in terms of housing and infrastructure delivery.

The rising costs of materials is another big issue. Last year the rate of increase in material prices was higher than at any other time in recent history with the cost of key materials like steel, timber and electrical fittings increasing significantly. AECOM expects construction cost inflation of approximately 3pc this year and tender price inflation of approximately 5pc. 

Last week, Cairn Homes said build cost inflation was around €15,000 per new home in 2021.


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