The recent survey reports that the Irish domestic construction sector has experienced a decline for the 17th consecutive month in February, casting doubt over the government’s ambitions to elevate home completion rates by 2.3% to 33,450 units this year.
A marginal improvement was noted in the BNP Paribas Real Estate Ireland construction purchasing managers index for housing activity, with February’s reading reaching 49.8, up from January’s 48.2. However, a score below 50 still signifies negative growth.
John McCarthy, the research director at BNP Paribas Real Estate Ireland, expressed concerns that ambitious growth observed in housing completions in recent years might potentially slow down in 2024, with this year’s governmental target being “in jeopardy”.
Two reasons were proposed by Mr McCarthy for the unfavourable stretch of housing activity reduction. Firstly, a discrepancy exists between the amount of completed projects and the number started; in the past year and a half, almost 3,600 more houses have been finished than initiated, negatively impacting on-site work. Secondly, the dwindling activity in home improvements is likely a consequence of ongoing uncertainty surrounding the economy and construction expenses.
The European Central Bank (ECB) has also raised its principal lending rate from zero to 4.5% in the 15 months ending last September, although it’s expected to return to 3.5% by year-end.
Conversely, Mr. McCarthy stated that continuous recruitment within the construction industry’s housing segment holds a promising outlook.
According to the Central Statistics Office, the quantity of new homes constructed in Ireland the previous year surged by 10%, reaching 32,695, surpassing pre-crash figures.
Feargal O’Rourke, the recently appointed chair of IDA Ireland, emphasised the necessity to raise the quantity of homes built annually to roughly 50,000 to meet inherent demand and maintain Ireland’s appeal for foreign direct investments.
Moreover, the overall construction activity index experienced mild growth to 47.4 this February, compared to 45.9 just a month prior. The subindex reading for commercial activity grew to 47.2 from a previous 44.7, whereas the future activity index soared to 64.9 from 58.6.
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