Planning and zoning alone won’t fix new homes crisis


Every day this week, every newspaper without fail has had another story about the shortage of new homes in Dublin. Are we getting into panic mode?

Report finds 35,000 new homes needed in Dublin

new homes press
A selection of today’s press headlines.

RTE runs with the same story about the 35,000 homes needed in Dublin between now and 2018. We’re not sure how that differs from the 54,000 the ESRI says we need before 2020 but the figures are high enough.

They point out that the SCSI has said there is planning approval for 26,000 homes, resulting in a shortfall of 9,000 properties.

Planning doesn’t mean they will get built

Unfortunately it’s not as simple as what gets planned, gets built. There are dozens of reasons why a planning permission for new homes might not get developed in the short term. Her are a few of the major ones:

  • Not Economically Viable – It costs a fair amount to build a house, even if the site is already owned. Whether it’s a single unit on a side-plot or a large scale development, property prices must rise to a certain level to guarantee the developer makes his money back. Using a built cost of €170 per sq ft and the cost of the site, a standard 1,200 sq ft 3-bed semi has to be selling for over €350,000 for it to be worth the profit, or €400,000 for a 1,500 sq ft 4 bed. Only a handful of prime south Dublin suburbs are back in that territory. If the price isn’t right, no builder is going to start work on a new home (as Nama chief Brendan McDonagh pointed out yesterday).
  • Bankrupt Developers – many of Dublin’s site, small or large, remain with bankrupt or stalled developers. Whether taken in hand by their bank or still in the landlord’s hands, these schemes may be stalled indefinitely. With sites at very low prices, many will be in massive negative-equity and unable to be developed for quite some time. Even with Nama working hard to release a few thousand properties, the slow churning wheels of receiverships and bank sales will not see a short term fix.
  • Lack of Finance – traditionally few builders would have used their own money to fund a build, and today many lack that as an option. Bank finance (or alternative funding) is a crucial lubricant for the market. While some of the banks are lending again, they are limiting the percentage of the value of the development to keep their risk low. In response the Construction Industry were last week calling for government assistance to make up the shortfall to help kickstart desperately needed schemes.
  • The Wrong Type of Planning – As we discussed in our Cherrywood debate last week, many old planning permissions were too apartment or commercial led to be viable today, when all the demand and emphasis is on family-sized homes. Many planning permissions will need to be reworked to adapt to modern needs and ultimately this may lower the numbers of units that will be built.

Land available for 100,000 Dublin homes

Housing Supply Capacity in Dublins Urban Settlements 2014 - 2018The SCSI have gone one step further, as reported in the Times today. Rather than just looking at outstanding planning permissions, they have calculated the zoning for Dublin’s four main local authority areas includes 2,233 hectares of land zoned for up to 100,000 homes. On that basis, there is no problem reaching the 35,000 or 54,000 new homes required… is there?

Well of course zoning, planning and actual construction are absolutely worlds apart right now. Zoning is designed for the long term strategy of the greater Dublin area and is designed to reach far into the future growth of the capital. It is complete unfair to imply the local agencies have been lax in their granting of permission (no one would have dreamt of saying that a few years ago…!):

While there is a minimum housing requirement of approximately 14,000 units in Dublin City, planning permissions have only been granted for some 1,300 units. This means that there could be a unit shortfall of up to 91% in this area over the next 5 years

In the South Dublin County Council area there is a minimum housing requirement of close to 9,000 units but planning permission has only been granted for 4,200 units, leaving a 52% unit shortfall.

Simon Stokes, the Chair of the Residential Agency Group of the SCSI said while the figures showed there was ample land zoned residential for new housing in the Dublin City Council area as a whole, the shortfall in planning permissions in the Dublin City Council area needed to be addressed as a matter of urgency.

However it is not sensible to think that just an increase in planning permissions will help developers break ground on new homes. We need a combination of measures from national and local government, construction industry, banks and stakeholders from across the industry.

[info]This article first appeared on, you can read the original here: Planning and zoning alone won’t fix new homes crisis.[/info]