Housing completions: are things getting better or worse?

While the number of houses being built has risen quite significantly in recent years, 2024 saw an unexpected and newsworthy decline in the number of completions. It's worth exploring why this is, and determine are we going backwards?

Figure 1 plots the number of housing completions since 2012.

One thing to note is the kink in 2020-2021. This relates to the pandemic and construction being temporarily on hold. These delays in 2020-21 invariably lead to a surge in completions in 2022, which otherwise would have been lower. The small rise therefore between 2022 and 2023 would in fact have been a little bigger and therefore a continuation of an underlying trend. With that in mind the decline between 2023 and 2024 seems like a sharper change of direction.

It would seem that the drop in 2024 is due to a small drop in the number of completed apartments. The composition of completions is given here in Figure 2. It shows how the increase in the number of dwellings completed were either scheme houses or apartments. The number of individual houses built is quite limited, only marginally more houses are built today compared to 2012, when the vast majority of new dwellings were single houses.

Planning permissions are another way of exploring this. While the uncertainty brought on by the pandemic would have dampened supply somewhat, planning permissions could more easily have been applied for.

Looking at the trend in planning permissions in Figure 2, a clear surge is evident from the period from 2015 to 2020. However, beyond 2020, the numbers appear to level off, rather than rise upwards, again indicating an inevitable slow down.

A decline in 2022 perhaps resulted from a more uncertain environment caused by the rise in inflation and building costs (itself caused by the pandemic response, War, global supply chains issues). The planning permission figures for 2023 were still lower than 2020 or 2021 and the projected figures in 2024 look to be quite the fall. You might notice that planning permission figures exceed completions. This is perhaps due to the vagaries of projects which receive planning permission but perhaps lack the capital required. Perhaps rises in interest rates also affect viability of these previously planned projects.

Perhaps there is merely a glut of units due to be completed. If we look at commencements it would suggest that there are lots more on the way. However, these commencements include 30,000 from two specific months, April and September coinciding with incentives such as development levy waiver and Uisce Éireann connection charge rebate. These perhaps include the glut of projects that would have had planning permission for a couple of years. It's unclear when they will actually be completed given that perhaps they commenced before they were actually ready to do so.

Much of the above data is limited to just 2012. Data is available before then but it is incomparable due to changes in measurement from 2012 and the discontinuation of other measurements.

For a long-run time series we can look at the number of ESB Connections, one of few series' that seems to have survived the change in metrics since 2012. This data is imperfect but it can we useful in terms of establishing an underlying trend. We can see from this that the scale of construction during the Celtic Tiger period dwarfs a significant rise that we see today.

Of course there are plenty of established reasons for this. But it does beg the question as to how much more building was achieved previously. One of the arguments for a lack of building today concerns how process of planning permission has stymied development, something that the Planning and Development Act 2024 is intended to resolve.