The latest figures from the Central Statistics Office (CSO) show that with home completions flat on 2019 levels and housing starts surging as restrictions were eased in April, it is now likely that new supply in 2021 will be above 2019 levels. In the context of the prolonged lockdown of the sector since the pandemic began, Goodbody Stockbrokers say this is an extraordinary result.
There was upward momentum in new supply coming into the pandemic, as evidenced by a pool of units that were in the system. The figures show a surge in apartment construction, particularly in Dublin. Yesterday’s CSO data shows that apartment completions were up 62% from 2019 levels in the first half of 2021.
Separate data show that 81% of housing under construction at the end of 2020 was apartments. Goodbody Stockbrokers say the surge in housing commencements in April/May 2021 (+250% relative to 2019) illustrates the ongoing resilience of the demand environment in the housing market. This has been highlighted by the growth in orderbooks of the quoted housebuilders in recent results.
According to Goodbody Stockbrokers, "Even if supply comes in above 2019 levels of 21K, it will be modestly so and still well below our estimated annual household demand level of c.35K. There are three important components to this supply – private, PRS and social. It is clear that the pandemic has not hampered demand from any of those three components, suggesting that supply will resume an upward trend in the coming quarters."