There is a huge risk that Government targets for house-building this year will not be met, a leading construction consultancy firm has said.
The warning comes as the property market shows signs of cooling, with Dublin prices falling in November.
When compared with last year, house prices increased – nationally and in Dublin – but economists say monthly changes are now showing price growth being pared back, with prices stabilising after years of gains.
Prices in Dublin fell modestly in November by 0.3 percentage points compared with those in October, the Central Statistics Office (CSO) said.
This was the first time that prices have fallen in the capital since July 2020, when the market was still under heavy restrictions due to Covid.
Higher interest rates and the cost-of-living crisis is making homes less affordable for buyers. But demand continues to be strong.
However, leading infrastructure consulting firm AECOM said a tough construction market was putting the Government’s Housing for All target of 29,000 completions this year at huge risk.
AECOM is an Irish company with offices worldwide.
It said the target of 29,000 completions of residential units this year may not be met due to inflation, interest rate rises, and general market uncertainty affecting viability.
It said there was a huge ramp-up in residential construction projects last year.
Director of AECOM Ireland John O’Regan said the Government’s average annual target to 2030 was 33,000 homes.
“There are signs that the viability challenge, which has been on a cliff edge, has in some instances tipped into negativity, as inflation and interest rates have risen,” he said.
The CSO said that, over the whole country, prices rose by 8.6pc in the year to November.
This is down from 9.8pc the previous month, as higher mortgage costs continued to cool the market.
The annual rate of increase in Dublin fell back to 7pc, from 8.3pc in October.
Many of these prices reflect deals from as far back as last summer, because they are based on filings of purchases lodged with Revenue and there is a time lag element to this.
Annual price growth outside Dublin was 9.8pc, as people move to rural areas from where they can now work remotely.
Statisticians in the CSO said there were 4,901 transactions involving residential homes in November. This was up 14.1pc on October, while the total value of transactions filed was €1.8bn – a sign of strong demand for homes.
Dermot O’Leary of Goodbody Stockbrokers said affordability concerns in the capital continued to lead to further dispersion of the population.
“Another contributory factor is the recent increase in the Co stock of properties for sale in Dublin,” he said.
The median, or typical, price of a dwelling bought in the year to last November was €300,000.
The lowest median price for a house was €150,000, in Co Longford, and the highest median price was €620,000, in Dún Laoghaire-Rathdown.
The most expensive Eircode area over the 12 months to November 2022 was A94 (in Blackrock, Co Dublin), with a median price of €745,000, while F35 (Ballyhaunis, Co Mayo) was the least expensive, at €125,000.
The national index is three percentage points above its highest level at the peak of the property boom in April 2007.