New home construction slumped in the first six months of the year, new data from Banking and Payments Federation of Ireland (BPFI) shows, amid a slowdown in the wider construction sector.
Work began on just 3,407 units between April and June, lobby group BPFI said on Friday. That was down 84 per cent on the same period a year ago, it added. It follows a 76 per cent drop in commencements in the first quarter of the year.
The slowdown, which broadly tallies with Department of Housing data, underlines the challenge facing the Government, which is targeting 50,000 new homes per year. Still, just over 15,000 new homes were completed in the first half of the year, up 20 per cent year on year.
“Just 7,384 units were commenced in the first seven months of 2025, well below the levels seen prior to 2024, and less than half the number of units commenced during the same period between 2021-2023,” BPFI chief economist Ali Ugur said in a statement. “While there were just over 40,000 units commenced in the 12 months to July 2025, these figures were skewed due to a significant portion of commencements being front-loaded in September and December of last year, ahead of the expiry of housing-related policy initiatives including waivers on the development levy and water connections charges.”
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The federation pointed to diversified finance options as key to meeting social housing targets and the Government’s housing aims. Almost a quarter of new property purchases last year were made by public authorities, such as Approved Housing Bodies (AHBs) and local councils, it said.
“Today’s report shows that after a slow start in the first quarter of this year, residential construction activity picked up in the second quarter when completions increased by 35 per cent from the same quarter in 2024,” said Mr Ugur.
A large part of that increase was due to apartment completions, which more than doubled in the second quarter of the year.
“Seasonally, completion activity in the second half of the year is expected to be higher than the first half and we expect a significant increase in the total number of completions during the second half of 2025,” Mr Ugur said.
Demand for housing and mortgages continues to increase, driven by population growth, employment and average earnings.
However, the provision of affordable and social housing continues to be an issue. Last year, there were more than 3,000 units built by local authorities, with more than 2,100 units built for cost rental schemes.
“Currently, the State provides funding for all social and affordable housing projects but if we want to increase housing output in the short term, AHBs and local authorities will need to diversify their funding resources for social and affordable housing,” said Mr Ugur, noting that rules on local authority funding to AHBs effectively block commercial banks and alternate private-sector firms from lending to AHBs.
“The wider AHB sector will continue to find it challenging to attract international finance partners through debt capital markets, which is common in other European jurisdictions, without the participation of domestic bank lenders who can lead on underwriting and due diligence,” he said.
