Category Archives: Irish Building and Construction

10/3/19: Irish Residential Construction Sector 2018: A New ‘Recovery’ Low


It has been an ugly decade for Ireland's building and construction industry. especially for housing. Following a historically massive bust in 2009-2012, indices of total production in the housing sub-sector fell from the pre-crisis high of 751.7 for value and 820 for volume, attained in 2006, to their lowest cyclical points of 57.9 and 59.5, respectively, in 2012. In other words, from 2006 through 2012, Irish residential building and construction production fell a massive, gargantuan, non-Solar-System-like 92.3% in value terms and 92.74% in volume terms. That was bad.

The recovery has not been any better. Since the lowest point of the cycle in 2012, through 2018, based on the latest figures from CSO, value of production in residential construction sector rose to 186.6, an uplift of 222.3% and volume rose to 176.9 (a rise of 197.3%). Still, compared to pre-crisis peak, current value of production in Ireland's residential building and construction sub-sector is down 75.2%, still, and in volume terms it is down 78.4%.


Of course, comparatives to the peak production year would be subject to criticism that things should be benchmarked by something 'other' than the levels of activity achieved during the bubble. I disagree. Back in the days of the bubble, Ireland experienced rampant house price inflation, as demand was still lagging behind supply. But, let me entertain, as in the above chart, an argument about averages over two periods: the period of the pre-bust activity and the period of the recovery activity.

Ireland today has an acute crisis in the supply of homes. There is no question about that. What 2018 figure shows, however, is far worse. In 2018, value of production in residential construction sector in Ireland grew by only 6.88% y/y - the slowest pace of growth since the recovery started in 2013. By volume, activity grew only 3.75% y/y in 2018 - also the slowest pace for the recovery period. As the crisis in supply of homes get worse, the rates of growth in the 'recovering' sector get shallower. This suggests that Irish residential construction is nowhere near the trajectory needed to achieve the rates of growth required to fill the gap in the housing supply.

In all 12 years of positive growth (between 2000 and 2018), last year marked the worst rate of growth in Value and the second worst year of growth in Volume terms. To put things into perspective: under 2018 growth rates, Irish residential building and construction production won't reach its 2000-2007 average levels until mid-2033 in value terms and mid-2052 in volume terms.

10/3/19: Irish Residential Construction Sector 2018: A New ‘Recovery’ Low


It has been an ugly decade for Ireland's building and construction industry. especially for housing. Following a historically massive bust in 2009-2012, indices of total production in the housing sub-sector fell from the pre-crisis high of 751.7 for value and 820 for volume, attained in 2006, to their lowest cyclical points of 57.9 and 59.5, respectively, in 2012. In other words, from 2006 through 2012, Irish residential building and construction production fell a massive, gargantuan, non-Solar-System-like 92.3% in value terms and 92.74% in volume terms. That was bad.

The recovery has not been any better. Since the lowest point of the cycle in 2012, through 2018, based on the latest figures from CSO, value of production in residential construction sector rose to 186.6, an uplift of 222.3% and volume rose to 176.9 (a rise of 197.3%). Still, compared to pre-crisis peak, current value of production in Ireland's residential building and construction sub-sector is down 75.2%, still, and in volume terms it is down 78.4%.


Of course, comparatives to the peak production year would be subject to criticism that things should be benchmarked by something 'other' than the levels of activity achieved during the bubble. I disagree. Back in the days of the bubble, Ireland experienced rampant house price inflation, as demand was still lagging behind supply. But, let me entertain, as in the above chart, an argument about averages over two periods: the period of the pre-bust activity and the period of the recovery activity.

Ireland today has an acute crisis in the supply of homes. There is no question about that. What 2018 figure shows, however, is far worse. In 2018, value of production in residential construction sector in Ireland grew by only 6.88% y/y - the slowest pace of growth since the recovery started in 2013. By volume, activity grew only 3.75% y/y in 2018 - also the slowest pace for the recovery period. As the crisis in supply of homes get worse, the rates of growth in the 'recovering' sector get shallower. This suggests that Irish residential construction is nowhere near the trajectory needed to achieve the rates of growth required to fill the gap in the housing supply.

In all 12 years of positive growth (between 2000 and 2018), last year marked the worst rate of growth in Value and the second worst year of growth in Volume terms. To put things into perspective: under 2018 growth rates, Irish residential building and construction production won't reach its 2000-2007 average levels until mid-2033 in value terms and mid-2052 in volume terms.

10/9/15: Building & Construction: 2Q 2015 y/y & historical compratives


Having looked at the relationship between PMI and actual activity in Irish Building and Construction sector in the previous post, now, let's take a closer look at the CSO series for actual activity in the sector.

As a starter, consider the current consensus view of the ongoing strong recovery in the sector.

All data not seasonally adjusted, so we are looking at y/y changes here.

First in terms of Volume of Production (excluding inflationary effects):

  • Total volume index for production in Building & Construction sector in Ireland was at 106.0 in 2Q 2015. This represents a rise of 8.72% y/y, second strongest increase in last 4 quarters. Compared to 1H 2011 the index is up 39.47%, seemingly confirming the overall story of strong recovery. However, the problem is that this recovery has been off horrific lows. Compared to series peak, activity in the sector was still 72.9% lower in 2Q 2015, and current levels of Building & Construction volumes are 53.7% below their 2Q 2000 levels. For the sake of another comparative, today's reading of 106 compares to 2000-2001 average reading of 234.6.
  • Residential Construction volume index stood at 112.6 in 2Q 2015, up massive 45.7% y/y, and up 58.9% on 1H 2011. Again, levels of activity are still weak: the index is still down 88% on pre-crisis peak and is 77.7% below 2Q 2000 reading.
  • Non-residential building volume index reached 113.3 in 2Q 2015, up 7.9% y/y and 26% ahead of 1H 2011. The index is still down 41.4% on pre-crisis peak and activity in non-residential building sub-sector is 33.4% below 2Q 2000 reading.
  • Civil engineering is the only sub-sector of the Building & Construction sector that is posting activity above 2000 levels. Current index at 92.6 for 2Q 2015 is, however, marking a decline in activity compared to 2Q 2014 (down 14% y/y). Compared to peak activity, the index is 43.9% lower today, but it is 16.2% ahead of activity registered in 2Q 2000.
Now, in terms of Value of Production (including inflation):
  • Total value index for production in Building & Construction sector stood at 107.1 in 2Q 2015, up 9.85% y/y, marking, once again the second highest rate of growth in the last 4 quarters. The index is still 71.3% below its peak reading, and is down 34.6% on 2Q 2000. Current reading of 107.1 is well below 2000-2001 average of 177.2.
Chart to illustrate:

Conclusions: overall, the recovery rates in the sector have been driven (to-date) by the low base from which the recovery is taking place. Double-digits growth is hardly inspiring when it happens in an environment where actual levels of activity are massively below where they were 15 years ago. That said, growth is better than contraction. 

18/6/15: Tripling Permissions… and Where’s That Construction Boom?


CSO released Planning Permissions figures for Q1 2015 with the following summary:


Which certainly conveys a sense of a veritable boom going on in the construction sector future activity pipeline. Yes, tripling of the apartments permissions and doubling of total dwelling permissions.

But here are the numbers in their more sober presentation. Please, mind - these are numbers from CSO itself.

  • Total number of planning permissions granted in Ireland in 1Q 2015 stood at 3,895. which is 11.2% higher than in 4Q 2014, but only up 1.62% y/y. In 1Q 2014, the same rose 17.04% which is much faster than in 1Q 2015. So the boom is getting less boomier.
  • Current level of planning permissions granted is 77.5% lower than at the peak while at absolute minimum of the crisis it was 81.1% lower. In other words, we are not that far from the crisis trough.
  • Current level of planning permissions granted is 10.27% below the absolute minimum achieved in 1975-1999 period.
  • The record busting quarter of 1Q 2015 is actually 13.76% below the quarterly average between 1Q 2011 and today.
  • Dwellings saw planning permissions granted rise to 1,065 in 1Q 2015 which is 21.3% ahead of 4Q 2014 (remember - seasonal variation not accounted for). 1Q 2015 number is 19.5% ahead of 1Q 2014, so there is nice growth here y/y.
  • Still, 1Q 2015 reading for dwellings permissions granted was 85.9% lower than pre-crisis peak, 26.9% lower than 1975-1999 period lowest recorded number and is 35.4% lower than the quarterly average for the period from 1Q 2011 through 1Q 2015.
  • In Sq. Footage terms: total volume of planning permissions granted in 1Q 2015 came in at 952,000 sq.m. which is 28% ahead of 1Q 2014, but 85.8% below pre-crisis peak. Things are getting healthier here, but still off very low levels.
You can judge the trends for yourself in the following charts:

Boom here?

Or boom here?

Or maybe a boom here?

Ah, at last, a boom here?

Oh dear... gotta be next time...

16/615: Building & Construction Ireland: Something’s Up, Something’s Down


So allegedly construction workers are now being bid out of Poland back into Ireland, the cranes are rising everywhere.

Nama is on track to deliver thousands of new homes, and commercial property markets are booming, primed for new development (see http://www.irishtimes.com/business/commercial-property/nama-set-to-dispose-of-ready-to-go-housing-sites-around-dublin-1.2234668)

Indices of construction activity are up in value, officially, q/q and y/y, while volume of activity is up y/y.


PMIs are signalling massive increases in building.

But the latest Building Information Index shows that the value of construction projects launched in 1Q 2015 was down EUR333 million or -20% on 1Q 2014, declining to EUR1.359 billion. In five out of seven escorts covered by the report there have been declines in activity, led by residential building sector that posted a decline of EUR174 million to EUR600 million in 1Q 2015. Good news, applications for new build are up 42% y/y in terms of value (including price and cost effects). Not surprisingly (down to price and development costs inflation), residential sector value of new applications is up 91%, while commercial is up 59%.

As they say, if we ain't building more and better, at least we are building more expensively...