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House building predicted to decline next year due to rising costs

The number of houses constructed in Ireland are set to fall next year due to rising costs of materials and more, according to Davy Stockbrokers.

Next year 27,000 houses are expected to be built – a drop from this year’s expected 28,000. This is far below government targets in order to combat the growing housing crisis.

Under the government’s Housing For All plan, 33,000 properties per year are to be delivered by 2030.

According to Davy’s chief economist, Conall Mac Coille, “cost inflation” is the biggest factor contributing to the slowdown.

“Cost inflation is the obvious factor which is feeding into a slowdown this year in site commencements and therefore house completions in 2023,” he said.

Reportedly, rising costs of raw materials have posed a significant challenge to builders. According to the CSO, in the 12 months from June 2021 to June 2022, wood and wood products became 38.1% more expensive. Basic metals were up 33% and other non-metallic mineral products such as glass, ceramics, cement, concrete, and stone rose by 23%. Mining and quarrying prices also had a large annual increase of 23.7%.

In addition, as part of Budget 2023, the government has put a new 10% levy on concrete blocks, which will drive up housing cost even further.

According to Davy, developers are already delaying and putting off building schemes for next year due to the turbulent economic outlook.

Last week, the Construction Industry Federation’s annual conference heard that any fall in the price of newly-built homes would make their construction unviable.

Ireland’s housing crisis is continuing to spiral out of control, with house prices rising by an average of 9.5% in just a year.

Moreover, house prices are set to rise by a further 4% next year.

One contributing factor to the problem was the fact that Ireland was the only EU country to shut down construction due to the Covid-19 lockdown – a move which Taoiseach Micheál Martin has said he “regrets.”

In addition, despite the housing crisis, the government has begun to move Ukrainian refugees into more traditional housing, such as apartments.

Earlier this month, 179 Ukrainains were moved into a €7 million apartment complex in Ballybofey, Donegal.

 

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