Inadequate housing projections in Government's National Planning Framework need to be addressed
2023 was a year that demonstrated the complexity of supplying homes en masse, even when the determination is there from all to do so. With such a high demand for housing and experienced home builders ready to commence projects, it would be reasonable to assume there should be a meeting of demand and supply. But the intricate nature of home construction involves many hurdles, both expected and unforeseen.
At the start of the year, the Government convened a special summit of stakeholders involved in housing to examine how we could expedite housing supply and overcome the many obstacles in its path. Urgent action was needed. Commencements of housing projects were dropping and all the data pointed to a declining outlook for housing supply ahead. The reasons are well documented.
Extraordinary cost increases in materials had been caused by a rise in energy and transportation costs. There was severe disruption to supply chains post Covid and an ongoing rise in the cost of borrowing for residential developments due to rising interest rates. The low level of planning permissions being granted due to dysfunction in the planning and development system was a significant barrier to building houses, with projects stuck in the planning system for years.
Projects that were assessed as viable pre-Covid, or before they went into the lengthy planning and legal system, were no longer financially feasible to build. Funding became more difficult and of course projects were stalling.
Of the planning permissions in the system, approximately 70,000 units, many were apartments. The reduction in the flow of international capital willing to forward finance or forward purchase apartment units meant the picture for apartment delivery was especially bleak.
Meanwhile the country faced a spiraling housing crisis, with daily reports of families unable to afford accommodation and young people unable to move out of home.
The need for solutions to address the housing supply crisis, for social, affordable and private homes, could not be overstated.
To ramp up supply, the Government announced Housing for All supplementary measures in April. These included a development contribution scheme waiver and water connection rebate scheme as well as changes to the funding models for cost rental housing schemes for approved housing bodies. Croi Conaithe 2, administered by the Housing Agency to advance the sale of apartments in cities, and Project Tosaigh 2 from the Land Development Agency to advance the construction of cost rental apartments, were also announced. Over the last few weeks there have been several announcements for both of these schemes.
The recent SCSI report on housing construction costs, which found that the average cost of building a home is €397,000, illustrates the challenges of managing and controlling costs in housing projects and just how expensive it has become to build them. The reality is that collaboration and cooperation between the state and private sector is a vital ingredient to increase housing supply across a range of tenures.
To support aspiring home buyers to afford homes, the Help to Buy and First Home schemes were maintained in October’s budget announcement. These schemes are vital to help our younger generations, who dream of owning a home, onto the property ladder. Every generation has benefited from affordability schemes and initiatives of some kind.
With these schemes in place for builders and buyers, the biggest issue to contend with now is planning.
The challenge of navigating our planning, and now legal system, to achieve a grant of planning, came sharply into focus in the recent RTÉ Investigates programme, which showed how our planning system could be abused. The Planning and Development Bill was published in November and may be a step towards reforming the system of approving housing projects, but resourcing the system is just as vital.
As we come to the end of 2023, we find ourselves in the familiar situation of grappling with the planning system. But there has been progress. The Government supply schemes are starting to boost supply and housing commencements are up almost 30% on last year. The new Compact Growth Guidelines will be important here to allow for more own door units in suburban and urban areas and are very welcome.
The big issue facing us all though remains the inadequate growth projections contained in the National Planning Framework. Hopefully its revision in 2024 should allow for more zoned land to cater for the increased housing that is required. An over reliance on apartment construction is simply unsustainable and it is time for these policies to be revived to allow for greater flexibility in our housing targets both in terms of quantum of land and location.
For 2024, house builders foresee a significant opportunity to move the dial on housing, but this does depend on a more streamlined decision-making process across planning, funding and infrastructure delivery.