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Knowledge & News

Impact of Covid-19 on Construction Output

6/5/2020

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Covid-19 has halted construction activity. A phased restart of construction activities on sites will commence at the end of May. There are a number of issues:

  • Site social distancing measures that must to be in place will have an impact on site productivity and delivery programmes – this will have significant impact on output.
  • The pause in construction from March to May, decreased productivity & extended programmes will have an impact on housing completions each month.
  • Reduced completions will create further difficulties in the housing market and increase the housing supply deficit. 
  • On account of the economic crisis caused by Covid-19 it is forecast that incomes will fall with knock on affordability issues increasing – this puts further pressure on residential development viability. Impact on construction costs is unclear.
  • Mitigation measures to safely minimise impact on output need to be considered

Our report (download here) draws the following conclusions:

  • Operational measures need to be put in place to mitigate reduction in construction output. Need to target performance beyond H&S compliance.
  • Global travel restrictions will reduce migration flows and possibly lower housing demand in 2020 & 2021 from estimate of 34k units in 2019 to below 25k in 2020.
  • A reduction in residential construction output of €4.6bn in 2020 & €3.8bn in 2021 is forecast. The impact on construction costs is unclear.
  • In spite of lower housing demand the reduced construction output will increase housing supply deficit by 21k units in period to 2022.
  • The estimated €4.6 billion reduction in 2020 output will have significant impact on employment, GNP & exchequer returns.
  • A well designed stimulus package (+ive cost benefit) could improve viability of projects currently on hold on account of affordability issues in the market & minimise negative economic impact. This could help to get construction started on a wider number of sites and minimise fall in housing output and increase in supply deficit.
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