The output of new homes may fall “well short” of the government’s 33,000-unit target as rising construction costs and interest rates continue to dampen investment, Goodbody Stockbrokers has warned.

In its latest housing commencement tracker, the broker highlighted another drop-off in new home starts in October, when construction commenced on 1,841 new units nationally.

This represents a 31% decline year-on-year, with apartment commencements down 29% and housing scheme starts down 23% in the three months to the end of October compared with the same period last year, reported The Irish Examiner.

It follows a 31% year-on-year drop-off in September, when 2,211 housing units were commenced, and means that the annual total for housing commencements to October is 26,608, down from a peak of 35,000 earlier this year.

“Viability of apartment construction has been compromised by increased construction costs and yields recently. Viability may also be an issue in terms of housing construction, but other factors, such as land availability, is also playing a role,” Goodbody said.

Goodbody added that housing output “may stall in the mid-twenty thousands over the next 18 months” and added: “This is well short of the Government’s Housing for All target of 33,000 units and even further below estimated end over the medium-term.”

Launched last year under its Housing for All strategy, the government has pledged to spend €20B on social and affordable housing over the next five years, including €4B in both 2022 and 2023.

However, figures provided by Minister for Housing Darragh O’Brien, in response to a parliamentary question from Sinn Féin’s Eoin Ó Broin, indicated capital spend for the nine months to the end of September reached just €1.2B. This included €568M on direct delivery programmes by local authorities and approved housing bodies.