Housing completions surge 33% in strongest first quarter on record but planning pipeline still falls short
BPFI expects around 40,000 homes to be completed in 2026, but warns Ireland needs annual output of 50,000 homes as planning permissions decline and capacity constraints persist
2 July 2026 | editor@breakingground.news
Ireland delivered its strongest first quarter for housing completions since records began in 2011, with 7,856 new homes completed during the opening three months of 2026, a 32.9% increase on the same period last year. However, despite the acceleration in delivery, Banking & Payments Federation Ireland (BPFI) has warned that planning activity, construction capacity and the pace of moving projects from permission to commencement remain significant risks to meeting long-term housing demand.
According to the BPFI Housing Market Monitor Q1 2026, annualised housing output exceeded 38,000 units by the end of March, compared with 36,284 completions in 2025, with total completions expected to reach approximately 40,000 homes this year. While this would represent another significant increase in supply, it remains around 10,000 homes short of the estimated 50,000 units required annually to meet current and pent-up housing demand.
The report highlights that housing supply strengthened across every residential category during the quarter. Scheme houses accounted for more than half of the year-on-year increase in completions, while apartment delivery remained heavily concentrated in Dublin. Of the 1,831 apartments completed nationally during the quarter, almost 78% were delivered in Dublin. Scheme house completions increased by 34.5% to 4,082 units, representing 52% of all completions, while single-house completions rose by 27.8% to 1,419 units, the highest first-quarter figure recorded since the CSO data series began. Munster accounted for almost one-third of both scheme house and single-house completions.
The report also recorded a sharp rebound in commencements, with 8,408 housing starts during the quarter, representing a 184% increase compared with Q1 2025. BPFI notes, however, that commencement data continues to be influenced by the distortion created by the ending of development levy waivers in 2024. Scheme housing represented almost 56% of all commencements, while Dublin accounted for approximately 35% of all housing starts and two-thirds of apartment commencements nationally.
Despite stronger delivery, planning approvals continue to lag future housing requirements. Just 8,092 housing units received planning permission during Q1 2026, representing a 1% decline on the same quarter last year. On an annualised basis, planning permissions totalled 34,889 units by March 2026. Over the five years between 2021 and 2025, almost 186,000 homes received planning permission, averaging just over 37,000 units annually, with apartments accounting for almost half of all permissions granted.
BPFI points to the growing disconnect between planning approvals and housing need. Recent research by the Central Bank and Department of Finance shows that it takes an average of 14 months for housing developments to progress from planning permission to commencement, rising to around 18 months for apartment developments and exceeding 21 months for projects within Dublin city. The federation argues that significantly more homes need to enter the planning system if annual output is to approach the 50,000 homes required.
Construction employment continues to expand alongside housing delivery. The sector employed 195,600 people during the first quarter of 2026, compared with 177,800 a year earlier, while employment has increased by almost 50,000 workers since Q1 2020. Around 62% of construction workers are now primarily engaged in new housing developments or renovation activity. Across the wider economy, total employment has grown by approximately 400,000 people since 2020, reaching almost 2.8 million, although overall employment growth has stalled over the past year. Construction recorded one of the strongest employment increases of any sector over the period, rising by 33% since 2020.
BPFI also identifies changing housing preferences among first-time buyers as evidence of increasing residential density. Between 2021 and 2025, the proportion of first-time buyer mortgages used to purchase terraced homes increased from 20% to 27% nationally. In Dublin, terraced homes accounted for 42% of first-time buyer mortgages, increasing from 37% in 2021, while the proportion in the Dublin commuter counties rose from 16% to 28%. Within the new-build market, terraced homes represented 53% of first-time buyer mortgages in Dublin and 31% in the commuter belt.
The move towards higher-density housing is also reflected in the size of new homes. BPFI estimates that average new dwellings are now approximately 30% smaller than in 2016, with average single houses reducing in size by 18% and scheme houses by 16% over the same period. The report suggests this reflects both changing housing types and increasing density across new residential developments.
The report also points to continued resilience in mortgage demand. During Q1 2026, 9,437 mortgages were drawn down, worth just over €3 billion, representing annual increases of 2.4% by volume and 7.8% by value. First-time buyers remained the dominant market segment, accounting for almost 60% of all drawdowns by volume and over 60% by value. Meanwhile, mortgage approvals reached almost €1.9 billion in May alone, with annual approvals now standing at 53,773 loans valued at €17.3 billion.
While stronger housing delivery has contributed to some moderation in house price inflation, demand continues to exceed available supply. CSO data referenced by BPFI shows residential property prices increased by 6.2% in the year to April 2026, easing from 6.7% in March, with the national median house price reaching €395,000. The report notes that April recorded no month-on-month increase in prices, suggesting inflationary pressures may be beginning to stabilise despite ongoing supply constraints.
Ali Uğur, Chief Economist at BPFI, said Ireland had entered “a period of stronger output and early signs of stabilisation” but warned that the structural imbalance between supply and demand remains unresolved. He said expanding construction capacity, accelerating the planning pipeline and reducing the time between planning permission and commencement would be essential if annual housing output is to approach the estimated requirement of 50,000 homes.
