Housing completions are expected to reach 20,000 this year, Goodbody analysts have predicted, as the sector bounced back from the construction shutdown triggered by Covid-19.
However, house prices are expected to fall 5 per cent by the middle of 2021, a more modest decline than previously predicted, with rents projected to fall further, the Goodbody Analytics BER Housebuilding Tracker said.
There may also be longer lasting effects from the pandemic, with housing starts down significantly.
Although the decline in housing completions is still an 8 per cent fall year-on-year, the figure is an increase from the previous estimates of 16,500, driven by a recovery in the third quarter of the year. It is also the second time analysts have increased their forecasts for housing output since the end of the first lockdown.
The Goodbody Analytics BER Housebuilding Tracker said 5,500 units were completed in the third quarter, up from 3,290 in in the previous three months. That brought output to within 3 per cent of the previous year, Goodbody said.
“This suggests that productivity levels have not been as severely affected by social distancing measures as we would have feared,” analysts said in the report.
An estimated 5,500 housing units were completed in third quarter, a 3 per cent annual decline but a sharp increase on the 3,290 completed in the second quarter. (-32 per cent year-on-year).
A larger fall was seen in apartment completions, an issue that may have arisen due to social distancing requirements on sites. Housing schemes saw output rebound to flat with last year’s level.
However, there may be a longer-lasting impact on the housing sector from Covid-19. Housing starts have slowed significantly, the report found, with housing commencements down 37 per cent in the three months to August. In the year to date, overall housing starts are down 24 per cent.
“As we noted previously, this suggests that the impact of the pandemic may be a longer-lasting one, with new developments completed but a more cautious approach taken on new starts due to caution on the market of the funding environment,” the report said.
New home sales
An analysis of the Property Price Register showed the decline in new home sales was slowing, with sales down 18 per cent year-on-year in the third quarter, compared with a 40 per cent decline in the second quarter of the year. In the year to date sales of new homes were down 21 per cent.
However, new lockdown measures could hit sales in the coming weeks, Goodbody warned, although viewings were continuing and construction sites remained open.
The report also projected a 5 per cent fall in housing prices and a more pronounced decline in rents as the continuing measures to slow the spread of the pandemic prompted an increase in working from home.
Mortgage lending is also expected to decline in 2020, falling 20 per cent before bouncing back to grow 9 per cent in 2021.
