Construction started at less than 30% of sites with planning permission in Dublin last year

Last month, consultants Mitchell McDermott said that construction costs of an apartment increased by 9.6% last year, with the total cost of delivering a two-bed apartment now in the region of €460,000. File picture: Larry Cummins

No construction activity has taken place at 70% of the sites granted planning permission in Dublin last year.

Despite planning permission being granted for tens of thousands of homes in Dublin, this had not “translated into construction activity” last year, according to a new report from a high-level Government taskforce.

Even though permission was valid for 62,247 apartments across the four Dublin local authorities, just 3,899 had been built by the end of March 2022. Furthermore, just 14,432 of these apartments were under construction meaning that no activity had taken place in 70% of cases.

The figures come amid warnings that construction inflation is stymying the delivery of apartments, with a typical two-bed apartment costing an extra €21-25,000 last year. Developers have warned that many apartments granted permission around the country may no longer be viable due to inflation.

In its report for the first quarter of 2022, the Dublin Housing Taskforce said there was an increase of 54% of the total number of homes under construction with the underlying trends indicating “a strong increase over time in the Dublin region”.

The number of apartments under construction remained higher than houses but the actual number of homes being built under the Strategic Housing Developments (SHDs) process remained low.

It said: “Of the 42,435 residential units granted permission by An Bord Pleanála under the SHD process across the four local authorities, 3,213 residential units have been built to date and 8,844 units are currently under construction.” 

This level of activity was just 28.4%.

The Department of Housing has replaced the much-maligned SHD process with a new system called the Large-scale Residential Development (LRD). The report noted that changes in the planning system would have affected the pace of planning activity in the beginning of 2022. Since then, the scandals at An Bord Pleanála and the subsequent delays in issuing decisions is likely to have exacerbated the situation.

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Regarding homes actually delivered, the report said the “relatively low level of completions is likely to be linked to the ongoing impacts of Covid-19 on the construction industry”.

Furthermore, there was a 15.8% increase in the number of apartments permitted but where no building had yet taken place. 

“This continues the trend in recent quarters of an apparent change in housing typology with a shift towards higher density apartment developments,” the report said.

Overall, of the 76,214 housing units for which permission had been fully granted, just 27,323 of them had either been built or were under construction which is around 35% of the total.

Viability

Last month, consultants Mitchell McDermott said that construction costs of an apartment increased by 9.6% last year, with the total cost of delivering a two-bed apartment now in the region of €460,000. The sales price would have to equal or exceed this to cover the cost, it said.

Paul Mitchell, who co-authored the report for the firm, said: “Our analysis found the issue surrounding non-commencements is not clear-cut but viability features front and centre. Thirty-three per cent of these developments related to regional apartments which are simply not viable.

“Affordable finance rates and a guaranteed buyer or buyers are a pre-requisite to any developer starting an apartment development. If these elements are not in place, supply will not be forthcoming.”