Banks Expect 30,000 Housing Units to be Completed in 2023
According to a study by the Banking and Payments Federation Ireland (BPFI), there could be 30,000 housing unit completions in Ireland this year if current building rates are maintained. The study compared the number of housing units completed in the year leading up to the end of the second quarter on a rolling 12-month basis.
The BPFI found that some 30,500 housing units were completed in the year to the end of the second quarter, when looked at on a rolling 12-month basis. This compares with 24,841 units during the same period in 2022. The BPFI chief economist Ali Uğur said that this was a positive sign for the housing market, which has been facing supply constraints and affordability issues.
He also said that further encouraging signs of future activity can be seen in the 18,546 units that were commenced in the first seven months of 2023, almost 2,000 more than in the same period in 2022. He added that if the sector continues to build at the rate seen in the second half of 2022, it is likely that total completions in 2023 could reach over 30,000 units.
First-Time Buyers Continue to Purchase Houses Despite Market Slowdown
The BPFI study also found that there is strong demand for mortgages from first-time buyers (FTBs) despite a wider market slowdown due to a drop in switching activity. Mr Uğur said that the latest figures from the BPFI show that in the first half of 2023, there were 20,389 mortgage drawdowns. This is a 7pc decline year-on-year, mainly due to the significant drop in switching activity.
However, he said that with strong economic fundamentals and latent demand, they expect solid demand for mortgages from the FTB segment. He said that FTBs accounted for almost 62pc of the volume and value of mortgage approvals in July. In the last year, almost 30,000 FTB mortgages were approved, valued at nearly €8.4bn. This is the highest annualised levels since the data series began in 2011.
Mr Uğur said that the State’s Help-to-Buy scheme and First Home Scheme provide useful indicators in terms of future potential FTB mortgage demand. In the first eight months of 2023, there were 23,635 applications to the Help-to-Buy scheme, compared with 19,354 in the same period in 2022.
Planning Permission for Homes Dropped by 23pc in Second Quarter
Despite the positive signs of housing supply and demand, figures from the Central Statistics Office (CSO) last week showed that the number of homes granted planning permission dropped by 23pc in the second quarter of 2023. Officials cautioned that planning permission figures can fluctuate significantly between quarters and this is not necessarily indicative of a longer trend.
The CSO figures show that permission was granted for 8,723 properties in the second quarter of 2023, compared with 11,374 during the same period in 2022. The majority of these permissions were for houses (5,858), while apartments accounted for only 2,865 permissions. The total floor area planned was also lower by 18.5pc compared with the same quarter of 2022.
The CSO said that one-off houses accounted for 29.9pc of all new dwelling units granted permission in this quarter. The average floor area per unit for one-off houses was higher than other types of dwellings at 228.9 square metres. The average floor area per unit for all new dwellings was lower than a year ago at 136.6 square metres.
