New Homes Construction Survey - Knight Frank
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New Homes
Construction Survey
2021
Below is a breakdown of where our survey respondents develop
2%
It is my pleasure to introduce the Knight Frank The survey findings demonstrate the
New Homes Construction Survey 2021. profound impact that Covid-19 has had on the
development community during the past year.
For many years our highly experienced team has worked
closely with national and international developers, landowners According to our survey, 54% of respondents reported ULSTER
and local authorities to deliver financially viable residential weaker construction activity in 2020 when compared to 2019.
development projects. We have utilised this extensive network Additionally, 69% of respondents reported that sourcing
in order to assess the impact of Covid-19 on the development development finance was more difficult due to Covid-19.
and building community during the past year and their thoughts
0%
The constrained funding environment as well as the
63%
on the year ahead.
general uncertainty created by the pandemic resulted in
Prior to the pandemic, Ireland was already experiencing a 65% of respondents reporting that they had postponed
shortage of residential units. Despite increases in output commencements on new projects. This is concerning as it
during the past number of years, there was still just 21,087 points to a weaker pipeline of units in the years ahead which CONNAUGHT
units completed in 2019 along with a further 20,676 units in will likely mean that achieving the level of supply that is DUBLIN
20%
2020 according to the CSO. While the latter represents a required nationally in order to satisfy demographic pressures
considerable achievement given that activity was shut down for will continue to remain elusive.
seven weeks and the more challenging operating requirements
Looking ahead, as the sector prepares to reopen and with the
that prevailed for the remainder of the year, this level of supply
falls well below the estimated 35,000 units that are required on
vaccination programme set to intensify in Q2, respondents REST OF
an annual basis. As the survey demonstrates, the uncertainty
are cautious but optimistic about the year ahead as 59% of
respondents believe that activity will be stronger in 2021 than
LEINSTER
created by the pandemic has stalled the investment and
in 2020. Additionally, 82% of respondents plan on adding to
construction of new housing starts which will only serve to
their land-banks in 2021 with 54% hoping to purchase land
exacerbate this crisis in the years ahead.
with planning and 28% without planning.
As the sector prepares to reopen, the survey highlights
15%
We hope you enjoy delving into the report and please do not
the urgent need for a renewed and sustained effort
hesitate to contact us to discuss the findings contained within
by Government to address the systemic barriers to
in greater detail.
homebuilding such as construction costs, planning and land
availability so that the sector can regain momentum as we
emerge from this lockdown.
MUNSTER
JAMES MEAGHER ROBERT O’ CONNOR
DIRECTOR SENIOR RESEARCH ANALYST
02 03
Supply Demand
Due to Covid-19, 54% of respondents reported weaker The majority of respondents reported that demand
construction activity in 2020 when compared to 2019 was in fact stronger as a result of Covid-19
“Demand remained strong,
especially from those
unaffected by job losses in
sectors such as IT and Finance. 9%
Additional savings built up WEAKER
“We were unable to during the pandemic and an
“Although completions complete 50% of our enhanced help-to-buy scheme
decreased by just 1.9% expected housing were also motivating factors
nationally in 2020 according stock as a result of the for purchasers”
Covid-19 lockdowns”
41%
to the CSO, the fall in delivery
was more pronounced in
Dublin where output
declined by 13.0%”
UNCHANGED
54% 26% 20% 50%
STRONGER
WEAKER STRONGER UNCHANGED
+3.0%
+2.2% NATIONALLY
Pricing +1.4% NATIONALLY
(+0.3% in 2019)
EX DUBLIN
(+2.5% in 2019)
DUBLIN
Weaker supply and stronger (-1.7% in 2019)
demand resulted in upward for for for
pressure on prices in 2020 sale. sale. sale.
Source: CSO
04 Developer comment Knight Frank comment 05
Project Delays Finance
The majority of respondents believe that the lockdowns 69% of respondents reported that sourcing
have added 4-6 months to completion dates development finance was more difficult due to Covid-19
€
“The uncertainty created
“Despite a strong by Covid-19 meant that
bounce back, supply was lenders were hesitant
impacted as a result of in terms of funding new
the delays caused by the opportunities and instead
first lockdown” chose to focus on their
existing loan books”
“Once the sector reopened,
easing in periods where 18% 18%
LESS THAN
NEITHER AGREE NOR DISAGREE
7-12MONTHS
workers returned to sites 3 MONTHS
on a staggered basis in
order to comply with social
distancing restrictions also
STRONGLY DISAGREE
added to delays”
STRONGLY AGREE
DISAGREE
64%
AGREE
4-6 MONTHS
33% 36% 22% 7% 2%
NEITHER AGREE
22% 35% 41% 2% NOR DISAGREE
Skills Shortages
57% of respondents believe that
Covid-19 has intensified the skills
shortage in the industry
STRONGLY AGREE NEITHER AGREE DISAGREE
AGREE NOR DISAGREE
06 Developer comment Knight Frank comment 07Planning Commencements
Encouragingly, Covid-19 did not deter respondents from However, commencements on future schemes
applying for permission for future projects were largely postponed due to Covid-19
“The drive to complete existing
“The upcoming expiry of the
schemes after the first lockdown,
Strategic Housing Development
uncertainty and funding
Act may also have been a factor
constraints meant that many new
behind this. Many respondents “Existing projects suffered
starts were postponed last year.
77%
expressed their frustration the delays caused by the first
According to the CSO, new starts
with the judicial review process lockdown. New projects were
were down 17.3% nationally and
which has stalled projects and “The approach in 2020
65%
8.9% in Dublin in 2020 suggesting delayed longer as new financing
must be addressed” was to consolidate existing
a weaker pipeline ahead” sources had to be secured. This
projects and to push on with
caused a six month delay to new
DIDN’T projects that were due to
project starts”
DELAY APPLYING start on site. Purchases of
FOR PLANNING sites were still done but on a
more cautious basis” POSTPONED PROJECTS
35%
23%
DID NOT
POSTPONE PROJECTS
DELAYED
APPLYING
FOR PLANNING
New Homes Design 15%
67%
“Houses will need to have purpose-
11%
designed working from home
(WFH) spaces. This could include 82% of respondents believe that STRONGLY AGREE
garden pods also. In apartments, NEITHER AGREE
in particular one beds and studios,
Covid-19 will result in changes to the way AGREE NOR
DISAGREE DISAGREE
new homes are designed going forward
7%
where two professionals are WFH, a
private WFH space will be important”
08 Developer comment Knight Frank comment 09Obstacles to Construction Outlook for 2021
The cost of construction will be the primary Despite concerns about the current lockdown, 59% of respondents
obstacle to delivery in 2021 believe that activity will be stronger in 2021 compared to 2020
“As the vaccine rollout
intensifies Covid-19 will be less
of an obstacle to construction.
26%
Issues such as construction
costs, planning and land
59%
availability will re-emerge
as the main obstacles to
construction in 2021”
WEAKER
STRONGER
15%
UNCHANGED
1 2 3 4 5 6 7
COST OF THE PLANNING LACK OF COVID-19 AND LACK OF RESIDENTIAL DEMAND FOR
CONSTRUCTION PROCESS AVAILABILITY THE ASSOCIATED DEVELOPMENT PRICES ARE END-PRODUCT
IS TOO HIGH OF SUITABLE ECONOMIC FINANCING TOO LOW
SITES UNCERTAINTY
“While there will be a strong
appetite for land when the Land Acquisitions 54%
WITH
current restrictions are
82% of respondents will add to their 28%
PLANNING
lifted, opportunities will be
scarce as 78% believe that land-bank in 2021 with 54% hoping to WITHOUT
PLANNING 18%
I DON’T ANTICIPATE
the supply of residential land purchase land with planning and 28% ADDING TO MY
LAND-BANK IN 2021
is tight”
without planning
10 Developer comment Knight Frank comment 11KEY CONTACTS:
Joan Henry James Meagher Evan Lonergan
Chief Economist & Head of Research Director Director
joan.henry@ie.knightfrank.com james.meagher@ie.knightfrank.com evan.lonergan@ie.knightfrank.com
Robert O’Connor Ray-Palmer Smith Walter Mythen
Senior Research Analyst Director Director
robert.oconnor@ie.knightfrank.com ray.palmer-smith@ie.knightfrank.com walter.mythen@ie.knightfrank.com
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