Mitchell McDermott believes housing output this year will be about 33,000 units, but it will take until the end of the decade before Ireland reaches 50,000 units annually.
Mitchell McDermott Annual Construction Report 2024
The Mitchell McDermott Annual Construction Report 2024 states that planning decisions on 20,683 houses and apartments are up to a year and a half late due to a logjam at An Bord Pleanála (ABP ), while another 8,139 units are being held up in judicial reviews. Combined, the 28,822 units comprise almost a current year’s housing output. Decisions on the 20,683 units in Strategic Housing Developments (SHDs) are now overdue by an average of 16 months.
Paul Mitchell, one of the report’s authors, said it was unacceptable that many SHD developments are being left in limbo in the middle of a housing crisis.
He comments: “We highlighted this issue at ABP previously and urged them to take on more planners, but the situation has not been addressed in any meaningful way. We are told increasing the supply of housing is the number one priority, but that doesn’t appear to be the case when you see delays of this magnitude in what is supposed to be a fast-track planning system. As well as undermining confidence and creating uncertainty around so many developments, these delays also come with a cost.”
Large-Scale Residential Developments
in stark contrast to SHDs, Mitchell McDermott says 98% of Large-Scale Residential Developments (LRDs) have been decided on time, and there were no outstanding judicial reviews for them at the end of 2023.
Paul Mitchell explains that the very different outcomes for LRDs provide some grounds for optimism. “The LRD process is a mix of the older standard planning application and SHD processes. We believe some lessons have been learned from the former, while the perceived lack of public participation in the SHD process has been addressed in the LRD process. But it all comes back to resources, and ABP needs more planners.”
Construction inflation falls to 2%
The report states general construction inflation fell to just 2% last year, down from 12% in 2022.
Mitchell says: “The stabilisation we are seeing in the prices of building materials is most welcome after a couple of years of dramatic price increases due to Covid and Russia’s invasion of Ukraine. Notable decreases in timber, steel reinforcement and bricks have been countered by upward pressure on ready mix concrete, blocks, mechanical and electrical, materials and labour.”
Vital government supports
Of over 20 incentive schemes available for homeowners, renters and developers, the report identified Project Tosaigh (LDA), Partnerships and Croí Cónaithe as most effective in improving supply. On the affordability side, Cost Rental, First Home and Help to Buy were seen as having the most significant impact.
Mitchell says that when foreign investment dried up due to rising interest rates, the government played a crucial role in purchasing and now forward-funding thousands of units. However, he warns that this level of support wasn’t sustainable in the long term.
“Last year, we saw lots of projects stall as private foreign investment exited the market. We estimate that 10,000 to 15,000 units would not have gone ahead if they had not been taken on by the LDA, local authorities and various approved housing bodies (AHBs).”
Housing outlook
Mitchell McDermott expects housing output for 2024 to be about 33,000 units, but it will take until the end of the decade before Ireland reaches 50,000 units per annum.
Paul Mitchell believes that after addressing planning logjams and plugging the finance gap, the third element that needs to be addressed is the lack of capacity in the market.
“There are currently 168,000 people working in construction. To go from 30,000 residential units to 50,000 pa, we will need 50,000 more workers. We need carpenters, plumbers, electricians, glazing installers and many more. We need to train more people, including young migrants, and we need to incentivise those with the required skills who are working abroad to return home.
“Housing them will be an issue and will require imaginative solutions such as an ‘Airbnb for Builders’, construction hubs, the wider promotion of the Rent a Room scheme and perhaps even dedicated construction worker hotels or hostels, but until we make a start, the problem is only going to get worse. We believe increasing the number of construction workers by 5,000 per annum is a realistic target,” he concludes.
To access the latest Mitchell McDermott data and take a deep dive look at construction trends across the industry, visit https://mitchellmcdermott.com/infocards