Stockbroking firm Davy has lowered its 2024 housing completion forecast to 44,000 units, down from a previous estimate of 50,000. According to Davy’s latest economic commentary, this shortfall in new builds is expected to persist until 2035, driven by lower-than-expected housing commencements.
Why is the housing supply shortfall persisting?
The dip in completions stems directly from a drop in housing commencements. Davy expects 42,000 homes to be built next year, which represents a slight decline compared to their 2026 projections. This trend suggests a long-term structural gap in the construction pipeline that won’t be resolved for another decade.
When commencements fall, the “pipeline” for future completions dries up. This creates a lag where current shortages are simply reflections of decisions made by developers years ago. For those tracking national construction statistics, this gap explains why new home availability remains tight despite high demand.
What is happening with the broader economy?
Despite the housing crisis, the overall economy is growing. Davy has revised its projections upward for this year, next year, and 2028. The firm specifically forecasts a 5% growth in national income for both 2026 and 2027.
Consumer spending has stayed resilient. Davy attributes this to a higher household savings rate from last year, which the firm says provides an “additional buffer against cost-of-living pressures,” even as inflation rates have risen.
How will government finances impact infrastructure?
Budget surpluses are expected to remain “substantial,” according to Davy. The firm states these surpluses are supported by two main pillars: consistent economic growth and corporation tax receipts.
This financial cushion allows the Government to maintain funding for infrastructure investment. Davy notes that the state can continue meeting planned contributions to sovereign wealth funds, even if public finances experience a decline.
Comparison of Housing Forecasts
| Period | Previous Forecast | Revised Forecast |
|---|---|---|
| 2024 Completions | 50,000 units | 44,000 units |
| 2025 Completions | N/A | 42,000 units |
Frequently Asked Questions
When will the housing shortfall end?
According to Davy, the shortfall in new builds is expected to persist until 2035.
What is driving the growth in national income?
Davy forecasts 5% growth for 2026 and 2027, supported by a resilient economy and strong consumer spending.
Where is the government getting the money for infrastructure?
Substantial budget surpluses, driven by economic growth and corporation tax receipts, are funding these investments.
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