Housing crisis: Construction report warns of ‘looming supply constraints'
A steep fall-off in housing starts combined with a slowdown in residential investment have fuelled further doubt about the
Government's housing targets
.
The latest quarterly market analysis from Construction Information Services (CIS) indicated that active housing commencements, the strongest indicator of future supply, dropped to a four-year low of 3,126 in the first quarter of 2025.
The report noted that this followed last year's surge in housing starts triggered by the Government's temporary development levy waiver.
'The post-waiver slowdown suggests looming supply constraints, particularly outside Dublin,' CIS said.
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The Housing for All output target for 2025 is for the construction of 41,000 new homes, a target that now looks increasingly remote.
The CIS report did, however, point to a pickup in new housing projects which rose to 284 with the potential to deliver 11,000 new homes – a 20 per cent year-on-year increase from 9,000 homes across 237 projects in the first quarter of 2024.
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'The 11,000 (figure) reflects the total number of homes those developments are expected to deliver over time — not–necessarily all within the same quarter," CIS'confirmed.
The latter include
Cairn Homes
's €345 million Montrose development in south Dublin (688 units),
BAM's
Castlelake development in Cork (716 units) and the €140 million Augustine Hill regeneration scheme in Galway (376 units).
The slowdown in individual unit commencement activity, however, was combined with slowing levels of investment in the residential sector here, a trend linked to higher interest rates and regulatory uncertainty.
Industry is pushing for the State's
rent pressure zone
(RPZ) system, which limits annual rent increases to 2 per cent or inflation (whichever is lower) and which expires this year, to be loosened to entice more investment but Opposition parties claim such a move would accelerate already high rents.
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Dave Thompson, vice-president for Europe and Ireland at CIS, said: 'While new project starts in Q1 suggest continued resilience, the significant decline in planning activity and public infrastructure investment is a red flag.'
'If we want to meet our national development targets, the pace of planning and public investment must catch up with market demand – particularly outside Dublin,' he said.
The Government has been on the back foot on housing since taking office in late January as a result of lower-than-expected housing output data, which put new home completions for last year at just over 30,000 when the ministers had been pledging it would rise to 40,000.
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The acceleration in housing supply in 2021, 2022 and 2023 was in the main driven by apartment developments in Dublin. The current stagnation is primarily because of a fall-off in this type of development.
Apartment completions fell from 12,000 units to 9,000 last year and are expected to fall again this year.
Cairn Homes chief executive
Michael Stanley
claimed last week that the State could not build 50,000 homes a year, the Government's target, without building 25,000 apartments a year because of a shortage of available land in cities.
'To hit 50,000 units a year in Ireland, and it's the answer nobody wants to hear, it has to include 25,000 apartments,' he said.
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