- Home Building Finance Ireland’s new report, “The Scaling Challenge”, reveals the extent to which homes are delivered by small and medium firms
- Market is highly fragmented, with only 11 of Ireland’s active housebuilders delivering consistently more than 300 units per year and 83 delivering between 50 and 299 units per year
- Report segments the housebuilding sector for the first time based on firms’ delivery capacity and geographic footprint
- Report also identifies what housebuilders say they need to meet the challenge of scaling up home delivery
Nine out of ten housebuilding firms in Ireland deliver fewer than 50 units per year, according to a new industry-first analysis of the construction sector.
Home Building Finance Ireland (HBFI), which was set up by the Government to fund the delivery of new homes, has today published a major new report, ‘The Scaling Challenge’, on the structure of the Irish housebuilding market.
The report has, for the first time in Ireland, categorised housebuilders based on their delivery capacity and their geographic footprint.
It reveals a highly fragmented market, with a large number of small and medium developers and a small number of large developers.
While 90% of housebuilders are classified as small and deliver fewer than 50 units, just 11 (1%) large developers are producing more than 300 units annually. Furthermore, only 83 (9%) medium-sized housebuilders are delivering between 50 and 299 units annually.
However, the analysis of homes delivered over a five-year period shows these 11 large developers account for a large share (32%) of total completed units, reflecting their ability to deliver at scale across various locations.
The report also shows how medium developers, many of whom deliver units nationally and whose scaling potential will play a key role in increasing housing supply, account for 38% of all output, with small developers delivering a further 29%.
Housebuilder views on overcoming the scaling challenge
The report also features the results of a survey conducted among SME developers and contractors to identify specific issues that influence their ability to scale. Among the measures the developers said were most important were:
- Continuing to reduce planning uncertainty.
- Accelerating delivery of essential infrastructure and services for land where homes can be built.
- Increasing access to suitably zoned, serviced and affordably priced land.
- Increasing the availability of both equity and debt capital – particularly for acquiring zoned land.
- Unlocking the economic viability of high-density development such as apartments.
HBFI commissioned advisory firm KPMG to carry out the research, which identified close to 900 housebuilding entities in the market. The research will be used to inform HBFI’s development of financing solutions that can help SME housebuilders to deliver more homes.
Simon Harris TD, the Tánaiste and Minister for Finance, said:
“I welcome this report, which highlights the vital role small and medium-sized developers play in delivering homes across Ireland. The research clearly shows that housing delivery depends on a diverse ecosystem of homebuilders of different sizes operating across different parts of the country.
As we scale up housing delivery nationwide, it is essential that every part of this housing delivery ecosystem has the right conditions to deliver and to grow.
This research provides a shared, evidence-based foundation to inform housing policy across Government and the wider housing delivery system.
To achieve our target of 300,000 homes by 2030, we need a sector that can scale sustainably. That means supporting homebuilders to grow and evolve – from small to medium, and from medium to large.”
Ms Dara Deering, the HBFI Chief Executive, said:
“HBFI is an active supporter of SME housebuilders, with over 80% of our funding approvals targeted at SMEs seeking €20m or less.
This report means, for the first time, we have data to give us a better sense of how the housebuilding market is made up and how we can get more SME housebuilders to deliver more homes.
The report’s findings emphasise the value of HBFI’s ongoing commitment to funding SME developers throughout the country.
We are continuing to grow our loan book in response to demand and this report will inform us as we develop additional solutions for SME housebuilders, to help them get easier access to the financing they need and scale up to meet the level of demand.”
Stephen Purcell and Andrew McKenzie of KPMG, the report’s authors, said:
“Our segmentation model provides deep insights into the type of developers delivering homes in Ireland and where they operate. The results show a highly fragmented market with a very large number of small developers active across the State but with a very small number of large well-capitalised developers delivering a disproportionate level of new homes.
This market dichotomy is central to understanding where delivery capacity is, where it is constrained, and where policy and capital investment will most directly drive a rapid scaling in the delivery of new homes in Ireland.”
The report is available to download here.