New homes focus should be on medium-density, viable housing as recovery from Covid-19 impact awaits 

Shared equity is one viable approach to affordability, argues  Sherry FitzGerald New Homes Director Paul Hannon, 
New homes focus should be on medium-density, viable housing as recovery from Covid-19 impact awaits 

Pipeline: planning permission has been granted for 113 new homes and apartments on the outskirts of Ballincollig in Cork. Computerised image via

IN the week that saw residential construction sites re-open following a 13- week shutdown, it is timely to discuss the challenges ahead for the New Homes market.

Just when the housing industry was beginning to increase supply of private and social housing, the industry suffered several major setbacks. Not alone has COVID-19 and the associated lockdown measures delayed delivery and affected the supply pipeline, but in addition, judicial reviews of a number of planned Strategic Housing Developments have stymied the Government’s efforts to accelerate the planning process for approval of new developments.

Ambitions to improve the sustainability of housing have added to costs, and this in turn means that larger scale projects are vital to ensure viability and encourage developers and investors to take the risks required to invest in projects. Several planned large-scale schemes in Cork at Ballyvolane, Glanmire, Douglas, Cork Docklands, Kilbarry and Ballincollig need to be delivered and the sooner the better.

‘Sustainable homes’ is not just about energy efficiency. It is very much around the delivery of diverse tenure communities, urbanisation, density and amenity (parks, cycleways, schools) all of which require considerable investment.

Unfortunately, some stakeholders at local and national levels have become so frustrated by the pressure to catch supply up with demand, that they have been adding tension to the community debates. As a result, this is exacerbating problems for all of those who are trying their best to deliver housing to people who seek to rent or buy a home.

If we have learned anything from COVID-19, it is that it shows how, by adopting responsible and informed decisions and listening to the experts and co-operating with each other, we can pull through this together.

Like COVID-19, there is no silver bullet that can solve the problem of meeting demand for housing. We need to recognise that the Government requires novel approaches so that they can work with individuals and families to assist them to buy their own homes. The proposed shared equity scheme is one of these approaches.

Paul Hannon heads Sherry FitzGerald's New Homes division in Cork 
Paul Hannon heads Sherry FitzGerald's New Homes division in Cork 

For me, there is too much concentration on height when we need to focus on viable delivery of medium density housing. National policy dictates that we must deliver a minimum density of 35 homes per hectare or 14 homes per acre. A good guide to visualising a hectare is a GAA pitch. Now imagine 35 homes on that pitch. Such density cannot be developed with traditional house types with back-to-back 11 metre distances and therefore apartments must be built in order to achieve this density. By simply varying some of the guidelines, it is possible to achieve courtyard style housing with viable and community friendly densities. For instance, there are high densities within some of our much-loved areas in Cork such as St Lukes, the streets and squares of the South Parish - Reed’s Square, Tower Street, Kevin Street, Evergreen Street and of course the Hibernian Buildings in Jewtown are all excellent examples of sustainable communities.

Furthermore, we need a significant uptick in delivery across all home types ranging from public/social homes, private rental homes, private for sale and self-build homes. While the housing industry needs to double output in a sustained and viable way and can do so via a wide variety of targeted solutions.

What can we do… The new Minister has done some very positive work and is engaged with a myriad of varied solutions, which are targeted at different parts of society and relate to differing housing needs. Here is hoping that he achieves his ambitions in the “Housing for All” plan due in the summer.

I am sorry to say there is an overly simplistic and even lazy critique of many initiatives but perhaps especially the proposed shared equity scheme. This will be particularly useful for first time buyer families as it will enable them to buy a home with mortgage repayments below monthly rents.

Furthermore, by fostering this cohort of demand it will encourage Irish builders to respond and as a result it could generate the supply of an extra 1,500 new homes each year. In Dublin, institutional investors are generating the demand which underwrites the viability of new development but in Cork we do not have the same luxury. We are reliant on private buyers securing mortgages and purchasing their ‘dream home’. There is a large cohort of buyers who are ‘locked out’ of securing a mortgage and purchasing a new home is purely aspirational. The proposed shared equity scheme would assist them to bridge the affordability gap.

Property Industry Ireland have prepared some examples which show how shared equity would benefit buyers.

Take a person or couple acquiring a home for €300,000:

Purchase Price €300,000 Deposit €30,000 Government Equity €75,000 (25%) Mortgage €195,000 Mortgage repayments years 1 – 5 €803 @ 2.85% Years 6 onwards, Equity repayments €73 Total repayments from years 6 onwards €876 per month or approximately 19% of the net income depending on the couple or individual earning approximately €55,000.

Another benefit is that as a person’s circumstances change and if income improves after promotions or after their children leave home, the couple can pay down government equity and thus increase their share of the ownership of the property.

Shared equity has potential to be a part of the solution complementing social and affordable accommodation which would make a meaningful difference to aspiring first time buyers.

Paul Hannon is Director, Head of Sherry FitzGerald New Homes Munster and member of Property Industry Ireland.

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