Upwards not outwards
IT may take another decade before supply matches demand in the Irish property market, Standard & Poor’s found last week.
A report by the rating agency said the property market here remains restrained by what it called “crisis legacy issues”.
In particular, it alluded to household debt remaining very high in this country despite the fact that we are eight years on from the onset of the crash.
The key question remains: how are we going to improve supply in our major cities to bring it within reach of the prevailing demand? The Government continues to implement the Rebuilding Ireland strategy, which focuses on five different pillars, or sectors, of the housing industry. The rental sector, which is one of these, is still reeling from the recent introduction of up to 25 rent-controlled zones, including Dublin and Cork city. This is without doubt driving the buy-to-let investor out of the market in those areas.
For many investors the financial returns have reached the point where they no longer stack up. There are simply too many barriers to entry. This may be one step too far. While there are some short-term gains for renters from these moves, I don’t believe they will last. Many investors now believe that they can secure a better return from alternative asset classes.
Historically, the planning laws and policies in our cities have favoured low-rise development. Is it now time to start building upwards instead of outwards? Last year, the Dublin city manager, prior to the publication of the Dublin City Development Plan (2016-2022), appealed for the maximum permissible height to increase to nine storeys.
Still, height was limited to eight storeys. Why exactly was this? What is the issue with taller buildings? With our weather, it’s not as if it is keeping the sunlight out. And while Dublin has always been regarded as a low-rise city, does that mean this cannot change?
I can already hear the murmurs of dissent. With the notoriously high standards of building regulations that persist in this country, surely it would be feasible to construct taller, quality buildings in designated areas around the capital. This would increase density and provide more affordable and accessible city living for smaller household units. It would also help to reduce urban sprawl. There are many people for whom location is of far greater importance than total living space and, while admittedly many householders like to live in the suburbs, a large number desire city centre living. If residential units are made using a high standard of construction combined with the provision of complementary services and amenities, standards can be retained.
It seems clear now that one upside of Brexit for Ireland will be an additional demand for residential homes, primarily in Dublin city centre, from those moving to work here. Many of these will be based in the city centre. Figures just released confirmed that the number of UK-based individuals looking for an Irish passport in January this year had doubled over the same period last year. This demand, which was unforeseen just 12 months ago, will only create additional pressures on an already limited resource. The population of Dublin city is expected to rise by 180,000 by 2030. Time for us to refresh our traditions.