Housing Slowdown To Hit Dublin Residential Construction in Next 2 Years
The number of housing construction starts will fall this year and in 2026, with demand driving home prices up even further, according to industry analysis group Construction Information Services.
Construction of 55,000 new housing units had started by the end of the third quarter last year, according to CIS figures, compared with 33,000 for the whole of 2023. However, CIS warned that the 20,000 completions recorded by the end of Q3 2024 was significantly below the government target of achieving 33,500 new homes every year.
CIS said that housing construction was a huge driver of industry activity in Ireland during 2024, but that supply remained “far short” of the government’s target.
“This shortage is exacerbated by a skills gap in the construction sector, which hampers the speed at which new housing can be developed and the cost of materials,” CIS Economics Director Allan Wilén said in the report. "The surge in residential construction is a testament to the effectiveness of government incentives like the development contribution waiver.
“This policy has created a front-loaded pipeline of activity, reflecting renewed confidence in the housing market. However, the challenge will be sustaining this momentum beyond the policy’s expiration,” he added.
This, combined with lower levels of pipeline planning, could have a significant impact on commencements in 2025 and 2026 and as a result CIS forecast a significant decline in starts before recovery to more stable rises in future years. CIS has also projected the number of all construction projects valued at less than €100M set to break ground this year in Ireland will halve.
It said that Ireland’s construction sector faced critical hurdles, including labour shortages, supply chain disruption, plus rising material costs.
The expected decline in activity this year comes after what CIS said was an “unprecedented” 2024 across all real estate development. By the end of the third quarter last year, the total value of projects across all property assets commenced had hit €13.4B, higher than €11.6B for the whole of 2023.
It added that investment in new hotels, bars and related developments jumped 240% in the first three quarters of 2024 compared with the corresponding period in 2023 and predicted ongoing investment in the hospitality industry.
“The project pipeline remains robust, with planning applications for an additional 2,338 new hotel beds and grants for 1,569 more,” it added. “This expansion is expected to continue, with projections showing investment in the sector rising to €385M by 2025 and €410M by 2026, reinforcing the sector’s upward trajectory.”
