The Government is set to miss its housing targets in 2023 and 2024, according to consulting firm EY.
hile housing completions are expected to be 400 units ahead of target this year, an EY report predicts shortfalls of 2,000 units in 2023 and 1,450 in 2024.
The Government’s Housing for All plan targets 24,600 completions in 2022, 29,000 in 2023 and 33,450 in 2024.
But rising costs, planning delays, land issues and competition from apartment building are all affecting the delivery of new homes, said the report by EY Economic Advisory for Euroconstruct.
Annette Hughes, a director at EY Economic Advisory, said “a lack of services and other infrastructure” is preventing planning permissions being converted into completions.
A total of 42,991 units were granted planning permission last year, according to the Central Statistics Office (CSO), 60pc of which were apartments.
A recent study by the Urban Land Institute found that there is not enough demand for the number of suburban apartments being built, with young buyers preferring city apartments and duplex homes.
The news comes after construction activity slowed again in May, with soaring costs in metals, fuel and sub-contractor fees weighing on firms.
Rising prices are hitting customer demand and business confidence, BNP Paribas Real Estate Ireland said, with three in four firms reporting a rise in costs in the month.
BNP’s Construction Total Activity Index came in at 51.5 in May, down from 52.5 in April. Anything above 50 indicates an increase in activity.
Housing activity had stronger growth than other sectors, with the index coming in at 56.6, while commercial activity slowed down to 52.2 and civil engineering work fell. New orders also fell, for the second month running, while business confidence was at its weakest level since October 2020.
“Cost pressure” was the main reason cited for the slowdown by respondents to the survey, who said customers are postponing projects until prices begin to come down.
Copper, fuel and oil saw the biggest price hikes, according to firms, and sub-contractor rates rose at the sharpest pace on record.
Construction price inflation is expected to average 10pc in 2022 and 6pc in 2023, according to the EY report, before falling to 4pc in 2024.
Despite rising prices, the report predicts construction output will increase by 4.9pc in 2022, 4.1pc in 2023 and pick up to 5.4pc in 2024.
BNP Paribas said the rate of job creation in the construction sector quickened in May to its fastest pace since January, while purchasing activity also rose.
John McCartney, BNP Paribas Real Estate Ireland’s director and head of research said the war in Ukraine and Covid restrictions in China are leading to rising costs but said “the overall picture remains broadly positive”.
“Construction activity continued to expand last month, particularly in the residential sector. Moreover, construction firms remain quite upbeat about the future,” he said.
“Taking the data as a whole, it appears that construction firms have been able to pass a proportion of higher input costs onto the consumer, and are confident that this can continue.”
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