The housing crisis is not over, but the new year will bring progress

A range of initiatives is helping to stimulate a noticeable uptick in new home completions

Glenveagh Properties PLC chief executive Stephen Garvey, Housing Minister Darragh O’Brien, and Dublin City Council CEO Richard Shakespeare at the sod turning marking the start of construction of over 850 energy-efficient new homes at Oscar Traynor Woods in Coolock. Picture: Conor McCabe

History will show that 2023 has been a very interesting year for the new homes market and the new homes system. The housing emergency is being addressed.

Housing output and delivery is not just a function of market forces but also the forces of a new housing system — policy and politics play a key role in these ongoing reforms and are beginning to positively impact with a pickup in commencements evident recently.

Internationally, most successful countries and cities have their challenges around planning and delivery of housing — it’s not a uniquely Irish issue, with similar deltas in supply and demand and debates ongoing around the world.

We are witnessing recurring shifts in the broader economic landscape, as well as fundamental changes in housing demands, all the while implementing systematic reforms to address future community needs that aim to foster positive impacts on climate, sustainability, and changes in migration patterns.

We are in the middle of very significant systemic change while also grappling with broader economic hurdles such as increasing interest rates and inflation. Albeit recent trends have seen some further shifts in these.

In my end-of-year opinion piece back in December 2022, I commented on some Government initiatives and incentives that were due to come into effect. Thankfully, we have seen movement on these in 2023. Planning reform is ongoing with the planning bill potentially to be enacted before the summer next year.

The Planning and Development Bill 2023 was published in late November and has reduced in size to just over 700 pages. It is undergoing the initial Dáil stage of five, before it goes through a further five stages of scrutiny in Seanad Éireann. Only after this will the bill hopefully be signed into law by the President.

The principal features of the Planning and Development Bill extend the life cycle of development plans to 10 years; provide significant restructuring & resourcing of An Bord Pleanála and a rebrand; introduce urban development zones and generally greater certainty of outcome and timing and hopeful a reduction in judicial reviews.

We have also seen the publication of draft guidelines for ‘Sustainable and Compact Settlements’ which should allow for more affordable, sustainable, and viable own-door housing schemes in future years subject to a functional planning system.

We understand the final guidelines should be published imminently and will allow for a different mix of housing types which should compliment some of the current demand supports such as help-to-buy and first homes shared equity schemes.

It should also see appropriate unit types being delivered in appropriate locations and thus improving the viability of developments in suburban Dublin, commuter belt towns in the greater
Dublin area, and Cork.

The development sector is increasingly diverse with several different tenures, notably Cost Rental, along with other initiatives and policies to be considered.

Ongoing dialogue with the public and private sectors is critically important to ensure collective success for Ireland’s growing society. The STAR (Secure Tenancy Affordable Rental) scheme to support the delivery of cost rental is a positive idea but needs considerable work to be fundable and effective.

To increase the availability of rental homes, a broader spectrum of landlords is essential, so it was very disappointing to see the very modest and underwhelming support of private landlords in Budget 2024. They are still exiting the market in large numbers with no sign of this abating.

We should see 32,000 homes completed this year with the affordable homes (AHB) sector increasing its proportionate role. The ongoing review of the National Planning Framework (NPF) and Housing Needs Demand Assessment (HNDA) is critically important.

We must plan for the decades ahead with sufficient supply targets likely closer to 50,000 per annum and ensure we have sufficient infrastructure, utilities, schools, amenities, parks, transport, and land management. Continuing to build up the right skills and capacity within the construction sector to deliver can follow when clear targets are set.

One of the simpler initiatives, which was instantly effective was the temporary waiver of development contributions and a rebate of the Irish Water levy which is currently due to expire in Spring — this measure needs to be rolled on for another year or two. Extending the measure has helped alleviate some of the impacts of interest rate and material rises and created economic viability in many projects.

Without an extension, the industry might experience a decline in the growth of project commencements.

The First Home shared equity scheme celebrated its first birthday last July and is gaining momentum and with other initiatives such as the Croí Cónaithe (owner-occupier apartment subsidy) finally announced with ‘pathfinder’ sites in Blackrock, Cork, and Dublin hopefully coming to the market early in the new year.

The Help-to-Buy scheme has undeniably been a welcome initiative.

Our own transaction volumes have shown strong resilience in the market, consistently averaging around 50 homes sold per week during the Autumn months. However, when examining Help-to-Buy data up to October, we note 27,101 applications yet only 6,114 claims — a mere 23% success rate without factoring in pent-up demand from previous years.

The gap between applications and successful claims illustrates the mismatch between demand and the available housing stock, underscoring the supply-side challenges in the housing market.

At many of our launches, we are seeing a similar ratio of three to four times the demand for the number of houses available and we have huge empathy for those aspiring to buy.

While progress is being made in implementing new policy measures, it is imperative to fine-tune the NPF (New Policy Framework) in line with the real-time Census data and strategically plan for our future communities.

Paul Hannon is director and head of Sherry FitzGerald New Homes Munster, and a council member of the Society of Chartered Surveyors Ireland.