Homebuilding slumps by 16% as construction inflation soars

Homebuilding in the Republic slumped by 16 per cent in the third quarter as construction costs soared, according to the Central Statistics Office (CSO).

The agency’s latest quarterly figures show construction output as a whole fell by 2.7 per cent between July and September this year. On an annual basis, there was a 4.5 per cent decrease in volume recorded.

The quarterly fall-off was most pronounced in the residential sector with output falling by 16.2 per cent.

On a seasonally adjusted basis, output in the non-residential building sector fell by 2.8 per cent while output in the civil engineering sector rose by 10.3 per cent.

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“With regards to pre-pandemic levels, there was a reduction of 12.3 per cent in construction activity from quarter 3 2019 to quarter 3 2022,” the CSO’s Shane O’Sullivan said. During the same period the value of construction increased by 6.1 per cent.

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The Government’s Housing for All strategy aims to deliver an additional 300,000 housing units by 2030, which works out at approximately 33,000 a year.

However, the acceleration in building costs is likely to slow the construction of new homes.

Building materials giant CRH recently warned that the industry faces a “second wave” of inflation as spiralling energy prices drive up the cost of everything from wages to logistics.

The London and Dublin-listed group, which works on big construction projects across Europe and the US, was hit by a 50 per cent increase in energy costs in the first half of the year.