Increased labour needed to drive construction output

An increase in labour capacity in the construction sector may be needed if the number of houses that work has begun on this year are to be delivered.

That is according to Banking and Payments Federation Ireland (BPFI) which says that between January and April, 30,138 units were commenced.

That compares with 32,800 in the entirety of last year.

“While commencement activity is strong, increased labour capacity may be required to deliver housing in line with commencement activity,” said Brian Hayes, CEO of the BPFI.

“However, indications are somewhat positive, with employment in the construction sector having increased from 147,500 in the first quarter of 2020 to 171,700 in the first quarter of 2024.”

“And it is likely that some of the skilled labour required for this increased level of output could be transferred from other parts of the construction sector, such as office construction, where activity seems to be decreasing.”

Publishing its latest Housing Market Monitor, the BPFI said construction production ramped up early this year.

It said that that while there has been a 12.1% reduction in housing completions between January and March when compared to the first three months of 2023, driven by fewer apartments being finished, there have been just over 53,000 units started in the year to the end of April.

“There were 18,000 housing units commenced in April 2024 alone, although this was possibly due in part to the expected end of the waiver on development contributions and rebate on water charges, which were subsequently extended in May to the end of this year for qualifying housing works completed by the end of 2026,” Mr Hayes said.

But Mr Hayes warned that with 42% of commencements for apartments, there could be a longer lag to completions.

“On the demand side, declining overall inflation levels are contributing to a more positive outlook for disposable incomes, which along with a growing population and government fiscal supports for prospective first-time buyers, are likely to sustain high levels of housing demand,” Mr Hayes said.