House building expected to rise in Ireland this year, especially outside of Dublin

The majority of chartered surveyors in Ireland expect construction activity to increase in year ahead but skills shortages and planning and regulatory challenges continue to be the main barriers.

Activity has been driven by a rise in home building and the commercial property sector I also seeing growth, according to the report from the Society of Chartered Surveyors Ireland and PwC.

Overall 56% of chartered surveyors has recorded an increased in construction in the last six months, up from 47% in the same period in 2017. The growth is more pronounced outside of Dublin.

Some 71% of chartered surveyors have seen an increase in private housing over the last six months, an increase of 13% while 68% have seen an increase in private commercial, an increase of 10%, and 44% have seen an increase in infrastructure, an increase of 14%.

The outlook is positive with 90% expecting construction activity to increase in the next 12 months, up 9% from last year.

The report also shows that skills shortages remain an acute challenge with surveyors reporting an undersupply of between 53% and 84% while those experiencing planning and regulatory issues also remains high at 77%.

According to Kevin James, chair of the SCSI quantity surveying group, the increase in construction activity outside of Dublin was particularly welcome. ‘It shows the recovery in the construction sector is gaining pace around the country,’ he said.

‘It’s also encouraging to see that one of the main drivers of the growth in activity is housing and given the current housing crisis increasing social and affordable housing numbers from what is an extremely low base is now a priority. The reported increase in infrastructure activity is also very welcome,’ he explained.

He pointed out that the skills shortage issue will have to be addressed in the short term. In particular quantity surveyors/commercial managers are in very short supply and the availability of skilled trades such as plasterers, carpenters, electricians, bricklayers and plumbing are an acute challenge.

‘SCSI members are experiencing the effects of the skills shortage first hand. One member reported that block laying costs have increased by 25% in the past six months. Another believes a lot of skilled trades are hesitant in moving across to residential from commercial contributing to the shortfall,’ James said.

The research also shows that 77% said that they had experienced problems with planning and regulations during the last six months. While this is the same as 2017, it means that planning and regulatory challenges have been identified as the next biggest challenge after the skills shortage.

‘While changes such as the fast track planning process for largescale developments and the release of new regulation in respect of apartment design and planning have been introduced in an attempt to tackle planning delays and the cost of construction, it is too early to determine whether these Government initiatives are having a positive impact on the industry,’ said Joanne Kelly, PwC Ireland real estate leader.

‘For an open economy that relies heavily on foreign direct investment and exports, it is critical that we have the housing and infrastructure to support it. While the report outlines some acute challenges, it is encouraging that plans have been outlined in Government’s Project 2040 Plan for significant infrastructure and housing investment,’ she added.