At least half of housing commencements in 2024 were due to uncertainty over the extension of the development levy waiver or water connection charge refund, according to the latest Housing Market Monitor for the fourth quarter of 2024, published today by Banking & Payments Federation Ireland.
More than 69,000 new homes commenced in 2024, more than the total number of homes started in 2022 and 2023 combined.
The report shows around 75,000 housing units could be completed in the next two years, based on commencement activity.
But it said inefficiencies in land, capital and labour issues must be addressed to increase housing output in the short term.
The BPFI noted that about 95,000 apartments were given planning permission between 2018 and 2022 but only 44,000 apartments were completed between 2018 and 2024.
“Today’s report shows that while there was a 6.7% decline in housing completions in 2024, solely driven by the fall in the level of apartment completions, more than 69,000 new homes commenced in 2024, more than the total number of homes started in 2022 and 2023 combined,” the chief executive of BPFI Brian Hayes said.
“Some 43% of those housing starts were apartments. However, we estimate that at least half of the total number of homes commenced during 2024 were due to the uncertainty about the extension of the development levy waiver in April (later extended until December) and water connection charge refund arrangement expiring in September,” he said.
“We believe that the completion date for the units commenced last year as well as some of the commencements from the end of 2023, will span the two-year period of 2025 and 2026, and hence we forecast a total housing output of around 75,000 units in the next two years,” he said.
“We expect a significant increase in output, particularly in the first half of this year but to reach the output levels required to meet demand, key labour, land and capital issues will need to be addressed,” he added.
Earlier this week the Central Bank said fewer homes will be built over the next two years than it had forecast earlier, due to a fall in residential construction last year.
The number of commencement notices lodged for new homes fell to 1,017 in February from 1,178 in January, new figures from the Department of Housing, Local Government and Heritage also showed this week.
Speaking on Morning Ireland, Bank of Ireland’s chief economist Conall MacCoille there was a surge in developers rushing to take advantage of waivers on development levies, local authority charges and water infrastructure charges, leading to a big rush big rush of commencement activity.
“I suppose developers typically go face by phase in a large housing development. What they’re doing or what they did last year was effectively was commence the entire development to make sure they can avail of that waiver,” he said.
“We’re really in the dark about where housing completions are going to end up this year. Obviously last year was a little bit disappointing and hopefully they pick up,” the economist stated.
He said he does not think that anyone expects 70,000 houses to be built, adding that the debate is really around if we will see 35,000 completions this year.
Whether that figure is 35,000 or 40,00, he said we are only “scratching the surface” of the kind of demand that is out there for housing.
