Davy Stockbrokers said today that Irish housing starts are running at annualised rate of 44,500 versus 94,500 one year ago.
Housing starts dropped 58% in August, based on housing registrations released today and last Monday.
Based on the Davy research model, the annualised rate of housing starts was running at 44,500 on average in June-August, seasonally adjusted.
That compares with a rate of 94,500 in the same period of 2006.
Davy is cutting its housing forecasts to 75,000 completions in 2007 and 55,000 completions in 2008
Economist Rossa White says: "We are cutting our housing forecasts due to the recent low run-rate in housing starts and a poor prognosis for the next few months from the industry.
We now project 75,000 completions for 2007 and 55,000 for 2008 (previously 80,000 and 65,000)."
The Government collects about €100,000 in levies and taxes from each new housing unit built in the State (VAT of 13.5% etc.).
Davy says investment in renovations and extensions to houses remains strong (this accounts for about one sixth of residential investment), offsetting some of the decline in housing activity.
The volume of residential investment may now decline by 12% this year and 21% in 2008.
Davy is revising its GNP estimates
It is revising its macro numbers in the light of its lower residential investment forecast.
The provisional estimate is for GNP growth of 4.25- 4.5% in 2007 and 2.5-2.75% in 2008. More detailed forecasts will be published in the next week.
