House construction growth could stall in 2024 – BNPPRE

March 12, 2024

Construction activity continued to contract in February, but at a slower pace than a month earlier, new data shows.

The BNP Paribas Real Estate Ireland Construction Index climbed to 47.4, up from 45.9 in January.

With any score under 50 representing a contraction, that was the weakest rate of decline in five months.

Residential construction activity performed the strongest, with activity falling by the smallest amount of all the various segments and the least extent in nearly a year and a half.

“Residential activity has now been contracting for 17 straight months,” said John McCartney, director and head of research at BNP Paribas Real Estate Ireland.

“This appears to jar with the strong upward trend in both housing commencements and completions. But there are two explanations. Firstly, the acceleration in completions has outstripped the acceleration in commencements. Nearly 3,600 more units have been finished than started over the last 18 months, and this has naturally dragged on onsite activity.”

“Secondly, probably due to continued uncertainty about the economy and construction costs, there has been a slowdown in home improvement activity.”

Mr McCartney added that at this early stage it seems rapid growth in housing completions over recent years could stall in 2024.

“Nonetheless, the continued upward trend in starts bodes well for residential supply over the medium term, and this is reflected in sustained construction sector hiring and the most positive sentiment reading for two years,” he said.

Meanwhile, the rate of reduction in commercial construction activity was also the least pronounced for four months.

Confidence in the 12-month outlook also grew amid hopes that new orders would return to growth, with sentiment hitting a two-year high.

Employment also rose for the third month in a row and at a solid pace, BNPRE said.

However, lead times lenghtened prices increased amid disruption to supply chains in the Red Sea and staff shortages at suppliers.

Cost inflation also quickened at the fastest rate since August.

Article Source – House construction growth could stall in 2024 – BNPPRE – RTE

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