Apartment planning approvals ‘outstrip demand’
But experts warn of disconnect between planning and delivery
PLANNERS granted permissions to build nearly twice as many apartments as houses in the first three months of the year – but experts say many are unlikely ever to be built.
Permission was granted for 9,698 apartments and 5,091 houses from January to March, reversing the usual pattern.
The surge in approvals for new apartments, chiefly in and around Dublin, is driven by the Government’s fast-track rules for approving large, high-density apartment developments deemed ‘strategic’ to address the housing crisis.
The director of research at Savills Ireland, John McCartney, said the planning pipeline for developments already outstrips demand. But delivery of apartments probably will slow this year because of Covid-19 disruption.
He cited internal Savills research showing that 3,641 apartments and 1,268 houses appear on course for completion in Dublin this year – around 30pc below last year’s levels. This suggests, when combined with first-quarter completions, likely national housing delivery this year of about 15,000 units.
The first quarter’s planning approvals were unlikely to result in much construction before 2023, he said – and only if we avoid a protracted recession.
“Developers can’t know what market conditions and viability will be like, what pricing and construction costs will be,” Mr McCartney said. “They just want to be in position to pull the trigger if conditions are sufficient to make a profit.”
That was backed up by Orla Hegarty, a lecturer at the School of Architecture at University College Dublin, who said record approval levels for apartments are disconnected from the capacity for delivery of homes, given the market’s weakness and developers’ profit targets.
“Calling these ‘fast track’ approvals is often a misnomer. Many of these apartments will never be built,” she said.
Developers have rushed to secure planning for apartment developments in their land banks to lock down the value of those sites, she said.
This is particularly the case for ‘strategic’ approvals, where higher-density designs increase land value even in the current weak market.
“This is just land speculation. A lot will not be built. Less than a quarter of permissions are ever built,” she said.
Yesterday’s Central Statistics Office (CSO) report on property planning approvals found that apartment approvals were running 274pc higher than a year ago and at nearly twice the level of housing approvals.
Approvals for houses normally run well ahead of apartments.
More than 93pc of these approvals were for sites in Dublin and its commuter belt, where dozens of ‘strategic housing developments’ have been approved in the past year. The rules, introduced in 2017, allow developers to bypass local authorities and seek direct An Bord Pleanála approval for developments exceeding 100 units.
The CSO found that more than 8,000 apartments were approved for greater Dublin alone and a further 1,031 in the commuter counties of Louth, Meath, Kildare and Wicklow – and fewer than 650 in the rest of the State.
Delivery is likely to be slowed by social distancing