There was a slight decline in construction activity in September, according to an index compiled by BNP Paribas Real Estate. This is the fourth decrease in the past five months
The slowdown was in the commercial sector, and is a result of the rising number of vacant offices, which has led to a decrease in new starts.
Housing activity did return to growth last month, following a fractional reduction in August. Taoiseach Simon Harris has predicted that “almost 40,000 homes” will be completed this year, but this is well in excess of most industry predictions, which are now hovering around last year’s total of just over 33,000.
The most recent forecast by Bank of Ireland’s chief economist is for just 33,000 completions in 2024.
The monthly construction purchasing managers index (PMI) provides close to real-time data on the levels of activity in the sector, and the housing sector is particularly watched.
The slight reduction in overall activity last month was despite the further expansion of new orders. This was the seventh consecutive month when new business increased.
Commenting on the survey results, John McCartney, director and head of research at BNP Paribas Real Estate Ireland, said: “September continued along the lines of the last six months with overall activity broadly flat, and residential construction out-performing commercial. This pattern reflects conditions in these respective markets.
“House prices and, to a lesser extent, rents are rising strongly. The demand for residential property is well underpinned by population growth, the strong economy and government schemes such as Help to Buy, which was extended again in the recent Budget.
“Notwithstanding a continuous rise in costs since the spring of 2020, these factors have given builders confidence they can deliver housing profitably, and residential commencements are strongly up.”
The index is compiled by S&P Global from responses to questionnaires sent to a panel of around 150 construction companies.
Last month housing activity increased from 49.8 to 51, but commercial activity dipped from 51.1 to 47.9.
