Tom Parlon

Director-general of the Construction Industry Federation (CIF) 1 The number of new residential completions will increase from 18,000 in 2017 to 20,000 in 2018 This compares to 12,666 units in 2015, representing an overall increase of 42pc from 2015-2017. On current trends, this will leave us short of the required 35,000 annual output required for the medium term. However, with the correct policy measures and an increase in the availability of finance, housing output could meet national demand by 2021.

According to CIF analysis of house-building activity levels throughout Q1 2017, the rolling 12-month figure shows an increase of 37.6pc in terms of overall commencements for the 12-month period to end March 2017. The total commencement figure for 2016 was 13,234. The CIF is concerned about the capacity of regional house-builders to build as it becomes financially viable to build again outside the Greater Dublin Area. While there is realisable demand increasingly outside Dublin with house price inflation making building new homes viable again, there are few avenues for housebuilders to access finance. As a result, without finance, we may see delivery of houses delayed outside Dublin. While limited supply is resulting in upward pressure on house prices and rents nationwide, it must be borne in mind that 91.5pc of the dwelling purchases filed with the Revenue Commissioners in May were for existing rather than new homes. 2 House price inflation will continue to increase in line with last year as demand continues to outstrip supply Ironically, this may see housebuilding become viable again outside the Dublin region. Currently, in these regions, housebuilders cannot build houses below the going rate of existing stock. As a result, people are being forced into the second-hand house market. We predict that in 2018/19, as the gap between the cost of building new homes and the cost of existing stock narrows to somewhere around 15pc, small pockets of new houses will appear in regional towns. 3 We will see apartments become viable outside high-end postcodes within two years Apartment building remains financially unviable at the moment outside D2, D4 and D6. We anticipate that apartment building may become viable outside these areas in the coming two years or so — specific measures to support such construction may be required to meet rapidly increasing demand in urban centres in particular. We predict any such apartments will be higher end and, due to the shortage of supply and location, at the premium end of the market for the foreseeable future. 4 Construction costs could escalate by 35pc Construction costs are set to increase in the coming months for a number of reasons. The tightness in the labour supply in relation to pent-up demand will put upward pressure on wages. The introduction of a sectoral employment order in the industry is to be welcome. The Government has agreed to a Labour Court recommendation to increase wages across the industry by 10pc. This is restoration of wage cuts over the last decade but will put smaller and regional builders under pressure. In addition, the claim for an 80pc increase in wages for crane drivers made by UNITE has the potential to drive relativity-based claims across all other operatives in the industry. If this situation were to arise, construction costs could escalate by 35pc. Finally, product suppliers into the industry are now in a position to increase prices after a decade of depressed activity. This and any potential Brexit effect has the potential to see increases in costs in the near term.