The construction sector is under Celtic Tiger levels of pressure and is in danger of overheating, according to a new report from construction consultants Mitchell McDermott. The report says 30,000 additional construction workers are required if housing targets are to be met. It says construction output grew by 12% last year, but the number of workers only grew by 4%.
Paul Mitchell, one of the authors of the report, predicted output would increase by a further 10% this year to over €25bn. “Output is outstripping our already constrained supply chain, and this is a worrying trend going forward. In fact, demand is at levels of constraint similar to the Celtic Tiger, especially in Dublin,” he said.
The report says that, while the number of housing unit completions has gone from around 6,000 in 2018 to 21,500 last year, this is still far below the 34,000 that most commentators say the market requires. It adds that last year saw a huge surge in the number of planning permissions for apartments, with 19,000 in all. However, Mr Mitchell points out that construction of many of the units has yet to begin and when it does, they will take another 18-24 months to complete.
According to the report, hotel and office construction are reaching full capacity and while there is still strong demand for student accommodation, the latter is facing viability and affordability issues. The report also says the market is being stoked by cost inflation, which is rising at 5-6% per year.
Source – Mitchell McDermott