According to the Construction Industry Forecast 2023-2025, the value of residential project starts is projected to decrease by 5% this year, reaching €3.96bn. This decline follows a 15% drop in 2022, where the value stood at €4.27bn.
Allan Wilén, the compiler of the report from Glenigan, attributed the anticipated decrease in housing starts to factors such as a decline in property transactions and increased borrowing costs. He noted that the number of dwellings sold in the first quarter of this year experienced a 13% decline compared to the previous year.
On a positive note, the forecast predicts a 15% increase in the value of residential project starts next year, reaching almost €4.55bn, followed by a further 10% rise in the subsequent year, exceeding €5bn.
In contrast, recent data from the Government reveals that in the first five months of this year, 12,987 new homes began construction, representing a 7.4% increase compared to the same period last year, and the highest level in eight years. The Government remains confident in achieving its goal of completing 29,000 housing units by the end of this year.
However, it is important to note that the Government’s figures include social housing, and completions have been increased through support for purchases by approved housing bodies.
The Glenigan report for Construction Information Services provides a more optimistic outlook, projecting growth in the overall construction sector over the next three years until 2025.
Increased planning approvals will contribute to this growth. Although the number of residential planning projects approved decreased by 9% in the first quarter of 2023, the number of residential units within those projects increased by 31% compared to the previous year.
Residential investments this year amount to €3.957bn, which represents over half of the €7.7bn invested in the overall construction industry.
Following a 7% decline in the overall industry’s value of project starts last year, there will be no growth this year. However, a 12% increase is expected in 2024, reaching €8.6bn, with a further 6% growth in 2025 to €9.1bn.
The construction of industrial and logistics buildings is anticipated to see the strongest growth this year, with a 15% increase, reaching almost €1.4bn.
Aside from housing, other sectors that are expected to experience reduced investment this year include community and sports, with a projected 25% decline in project starts, totaling €158m. However, these sectors are expected to see increased investment in 2024 and 2025.
The agricultural building sector, which experienced significant declines in the past two years, is likely to see a further 20% drop this year to €52m. However, it is expected to maintain a similar level of new investments next year.
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