Planning permissions for apartments fall despite demand

The number planning permissions granted for apartment units has unexpectedly fallen, despite several Government initiatives to promote higher-density housing and an ongoing supply shortfall. Figures from the Central Statistics Office (CSO) show planning permissions for apartments fell by 4.1 per cent to 2,694 in the first three quarters of 2017.

In contrast, planning permissions for housing units rose by nearly 21 per cent to 11,148 over the same period.

The planning bias in favour low-density housing will come as a concern to the Government, which has been pushing for more high-density schemes as a means of addressing the current housing crisis.

The fall-off also comes in the wake of recent legislation to provide for fast-track planning for large-scale housing developments and revised apartment standards to reduce the cost of developments.

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The figures also appear to underscore a recent report by the Society of Chartered Surveyors Ireland (SCSI), which highlighted the relatively high cost of building apartments in Dublin, where demand is most acute.

The SCSI’s report, published in October, suggested the cost of delivering a two-bedroom, medium-rise apartment in Dublin city centre ranged from €470,000 to €578,000 excluding VAT. This compared with €330,493 for delivering a three-bed semidetached house in Dublin in general.

Trend

Housing expert Mel Reynolds said despite a string announcements and policy measures aimed at boosting high-density developments "the trend in planning is going the opposite way".

He said the figures reflect a difficulty in financing phasing and costs for apartments.

However, using planning permissions as a guide to future building activity can be problematic, with research suggesting that up to 40 per cent of permissions never translate into homes.

This is because permissions are often sought just to add value to land; or to alter or extend existing provisions. Equally, many building projects fail for financial reasons before the building phase begins.

In its latest annual review, the Central Bank highlighted the ongoing problem of supply in the residential sector, noting availability would be the chief determinant of residential property prices and rents.

However, it also highlighted that uncertainty surrounds the exact level of new housing completions as conflicting data, including ESB metering data, needed to be considered.

The report also noted that the number of rental units listed in November was about 90 per cent lower than its peak in 2009. The situation in Dublin was particularly acute, it said, with just under 1,300 properties advertised for rent compared with almost 8,300 in July 2009.