Demand for housebuilding
Housebuilding is increasing in Northern Ireland, but bank funding remains limited and more training is needed, says David Little, NHBC regional director for Northern Ireland and the Isle of Man.
The local housing market has been recovering since 2013 – there has been an increase of more than 30 per cent in new dwelling starts over the last two years1 and a seven per cent increase in selling prices over 20152. The resulting number of starts in 2015 was 6,662, but there was little change in completions at around 5,500. Demand, and production on site, is clearly picking up so there is little doubt that completions will catch up in 2016.
The housing supply forum report was finally published in January and the general consensus amongst contributors was that approximately 10,000 new homes per annum are required. However we may need to build even more houses to allow replacement of the pre-1919 stock which represents over ten per cent of the total housing stock in Northern Ireland.
Unsurprisingly, developer contributions have been ruled out as unsustainable for the foreseeable future. However, at least one council is apparently using section 76 of the Planning Act 2011 to seek contributions as part of planning agreements.
A new generation of developers has entered the market, many with funding from outside the sector and, in several cases, from outside Northern Ireland. I expect that within a few years, up to half of new homes for sale will be produced by these new developers and opportunities have arisen for local builders and contractors to build for them.
The sector remains characterised by a large number of small builders, most of whom build less than 15 homes each year. We are still hearing of a lack of support for these small builders from the local banks, so without the necessary financial support in place, I do not expect a significant increase in production from them.
The last major change in building regulations was in October 2012, and the current level of thermal performance of new homes has resulted in buyers and renters enjoying remarkably low costs for heating. With ‘turnkey’ finish internally, and low maintenance finishes externally, running costs for new homes are probably, in relative terms, lower than they have ever been.
Skills shortages have not affected housebuilding and the wider construction sector in Northern Ireland as much as I had feared two years ago. It is only a matter of time however before pressure begins to emerge, as our neighbours in Ireland and Great Britain are already well ahead of us in terms of recovery within construction activity. In the Republic of Ireland, for example, demand for construction and property industry professional staff increased by 46 per cent in the year to February 2016, and applications for construction courses are up by around ten per cent this year.
I am unconvinced that there is sufficiently positive advice coming from our schools to their students that construction should be seen as a desirable career at all levels, from trades to professions, for both males and females alike.
Overall then, it is clear that we face increasing competition from our GB and Ireland neighbours for our construction personnel, and to remain competitive, we simply need to be training and developing more.
- NISRA / Department for Social Development housing bulletin
- Land & Property Services / Northern Ireland Statistics and Research Agency (NISRA) residential property price index