Housing delivery: Now is the time for “radical Government measures”
Speaking to property developers right across the country in recent weeks, the team at Lotus IG are increasingly concerned about the chronic shortfall in housing supply that continues to persist in the country and the lack of urgency shown by policymakers to address this. And the industry is not the only group with growing concerns. Interestingly, a recent bulletin issued by the Economics Division of the Department of Finance stated that only “radical Government measures” can tackle housing supply at this late stage.
The rise in interest rates has exacerbated the issue of unviable Build-to-Sell apartments, which has been partially offset by the Build-to-Rent output. However, the increase in interest rates is likely to dampen housing demand and prices and may affect the availability and cost of financing for housing projects.
While our team works daily to bridge this gap and to support homebuilders up and down the length of Ireland, prevailing government policy is directly contributing to the ongoing shortage of housing. We are keenly aware of the many varied challenges associated with the development of new residential schemes, including the high cost of construction, which is partly due to the lack of available land for development, and planning uncertainty (chaos?). The Government’s failure to provide enough land for residential development has resulted in developers having to purchase land at inflated prices, which drives up the overall cost of construction.
Planning has such a critical role to play in the delivery of much-needed new homes as scale, but any optimism around the Draft Planning and Development Bill 2022 published in recent weeks has been dampened by the threat of decades of legal challenges. The Department of Finance is absolutely right, Ireland’s housing delivery needs radical measures, but where are they going to come from?
One potential solution is ramping the development of Build-to-Rent properties, however the proposed bill to extend the ban on evictions by 12 months is a matter of concern for both investors and developers. While the intention of the Bill to combat rising homelessness is commendable, it may have unintended consequences for the development of new residential properties. While the Irish Property Owners Association has criticised the eviction ban, and it is expected to be stopped in its next stage, it was particularly frustrating to read that this Bill reached the second stage of the Dáil simply because Junior Housing Minister Kieran O’Donnell forgot to oppose it..!
Lotus Investment Group