Home-building will slow after new starts topped 55,000 in late 2024, while the struggle to hit government targets will continue this year, according to latest forecasts.
Independent consultancy Construction Information Services (CIS) calculates that work had started on 55,000 new homes in the Republic by the end of September last year, prompted by State incentives. But ending the waiver for development levies to local councils will contribute to a “significant decline” in new home starts this year and next before a recovery to more stable growth, says CIS.
In 2023 government waived builders’ obligations to pay development contributions, meant to cover the cost to councils of providing roads, lighting and other infrastructure to new housing, in an effort boost building once work started before December 31st last.
CIS expects to see the impact of the waiver, help-to-buy scheme and other incentives on the supply of new homes this year and in 2026. However, its says supply still struggles to match government targets. Up to the end of September, 20,000 new homes had been built in the Republic in 2024.
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“It will be challenging, to say the least, for the government to reach its target of 33,500 new homes,” says the firm’s Irish Construction Industry Forecast 2025 – 2026.
Allan Wilén, economics director at CIS, argued that last year’s surge in new home building was testament to government incentives. “This policy has created a front-loaded pipeline of activity, reflecting renewed confidence in the housing market. However, the challenge will be sustaining this momentum beyond the policy’s expiration.”
His firm notes that new housing supply is not meeting demand despite government efforts. “This shortage is exacerbated by a skills gap in the construction sector, which hampers the speed at which new housing can be developed and the cost of material.”
Elsewhere, industrial building is poised to pick up after a slowdown last year in the pace at which new projects got under way. CIS believes this sector will grow steadily over the next two years. “The pipeline of planning applications submitted and approved remains strong,” the report adds.
It highlights Guinness owner Diageo’s new €200 million brewery in Newbridge, Co Kildare, on which Walls Construction began work last May.
“The project will bolster the local economy by being the second largest brewing operation in Ireland, creating 1,000 construction jobs and a further 70 permanent jobs when operational,” says CIS.
The brewery will produce lagers and ales and potentially extra quantities of the non-alcoholic Guinness 0.0.
Local contractors are also working to meet global pharmaceutical manufacturers’ demand for expanded production and research and development here, CIS notes.
By contrast office building’s post-pandemic slump will continue. “Project starts are at their lowest since 2019, and we estimate the value of new investment in the sector will fall by 45 per cent in 2025 compared with 2023,” says the firm.
It suggests that the industry could emerge from this by redefining offices to “offer a more enticing place of work”.
Hospitality construction is in for a strong period, says CIS. By the end of September last year work had begun on 40 hotels with a total of 2,235 beds “outstripping the 644 beds” brought to the market in 2023.
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