EY Report Forecasts Strong Output for Construction Sector Despite Supply Issues

The latest EY (Ireland) report on construction activity describes the outlook for Ireland’s construction sector as “cautiously optimistic”, despite the still-unfolding impacts of Brexit, the pandemic, and the ongoing war in Ukraine.

The EY data forecasts 25,000 housing completions for 2022; 27,000 in 2023; and 32,000 in 2024. All of which have been revised downwards and all are drastically below the required 50,000 new homes needed annually, according to Ronan Lyons. Interestingly, Sherry FitzGerald’s Marian Finnegan, when addressing the industry at a recent Property Industry Ireland (PII) event, suggested that the real total of new homes needed annually might be closer to 60,000. [As an aside, one of the key insights from the PII event was that Ireland is underestimating its population and resulting housing needs by a figure of 300,000, which is alarming]. Rising construction costs, shortages of construction materials and persistent labour shortages remain key challenges to housing delivery.

Speaking about these supply chain challenges, Annette Hughes, director at EY Economic Advisory,  pointed out that housing remains a core political, economic and social issue, and she further explained that:

“Recovery has however been varied across sectors and is set against a challenging market backdrop related to inflation and supply chain issues. The excessive price rises experienced in 2022 thus far are putting a strain on, for example, the cost of delivering some of the infrastructure projects in the NDP, as capital budgets for the year are already determined.”

The robustness of the sector has been attributed to Ireland’s current strong economy, a buoyant labour market and a “remarkably resilient” public sector balance sheet. EY data estimates the value of 2022 Irish construction output at €29.1 billion, with increases of 4.9 percent and 4.1 percent predicted for this year and next respectively. These estimates are based on likely inflation of 10 percent in 2022 and 6 percent in 2023.

The EY report can be accessed in full from the following website: https://www.ey.com/en_ie