2020 has forced enormous change in every industry and community. From a home building/community creation perspective, industry are beating the odds, physically and literally ‘digging in’ to complete in excess of 18,000 homes. This is a great achievement, but less than half the homes required annually and while completions are better than feared in Lockdown 1, the challenge now relates to new commencements and uncertainty on policy, planning, viability, and affordability.
To solve the crisis in housing and homelessness we need specific targets on the composition of housing need. We need to embrace the diversity of requirements and engage all stakeholders collectively – the ‘cuckoos’, the ‘vultures’… all the birds.
The Minister has already moved to streamline some of the process of delivery of social housing. However, more is necessary, and the capacity of the entire sector can be more responsive by lowering perceived differences in the way houses are secured for those who otherwise can’t afford them. The building is undertaken by the same group of skilled craftspeople, regardless of who commissions the work.
Liquidity, a functional planning system, and an effective utilities infrastructure are fairly basic essentials too!
If we are serious about a functional housing system, it will require serious funding. If for example 50,000 second-hand homes transact annually and 40,000 new homes are completed, (of all tenures: public, private, self-build, shared equity, rental, cost rental etc.) liquidity of €30bn annually would be required. The current mortgage market of roughly €7billion per annum needs to double at least, with cash buyers, institutional capital and the state making up the balance of the other €15bn or so.
The Central Bank have protected the system, that is not in doubt however, the macro-prudential rules have lacked agility and variation over the last five years. The rules have locked a cohort of buyers out of the market, forcing them to remain in rental accommodation and in some cases un-suitable housing while interest rates have reduced significantly. The onerous 20% deposit for second time buyers has proven to be a barrier to mobility and as a result there are in-sufficient numbers trading up or down. If the government were to consider refining what is proving to be too blunt an instrument, it could be transformational for many.
The recent government announcements around a Shared Equity Scheme are hugely welcome but before shovels can be readied, the details of the scheme need to be clarified. It could have the potential to assist in the delivery of 3,000 – 5,000 additional new homes annually. It is critical the price caps reflect viability, density, and differing house typographies (houses, apartments, duplexes etc).
The enhancement of the Help-to-Buy scheme in July has helped buyers but expires next year, and I would suggest the government need to take a take a long-term approach to this incentive. The HTB is a tax rebate scheme, and not a grant, so qualifying criteria can be restrictive.
New homes sales have been robust in 2020. Cork has had a particularly strong year, as has North Wicklow. Last weekend alone we agreed sales of over 30 homes, predominantly to First Time Buyers, on behalf of Gannon Homes in their major new development Belcamp on the Malahide Road in Dublin 17.
It is worth noting that only 4% of our new home sales were apartments. Apartments are being built, with buyers in the main coming from the private investment fund sector, with lesser numbers being acquired by the private investor and owner occupier. A greater support for the latter could be the shared equity approach.
It has been great to see a strong conclusion to 2020 within the Private Rental Sector market with good institutional confidence, demand and capital being deployed. We have several transactions at contract stage and there is a strengthening pipeline for 2021. This is a critical component of the market and should be embraced.
The planning process continues to throw up challenges within the sector with a lot of policy currently under review. The fast track planning process (SHD) is due to expire in 54 weeks. This, together with ongoing plague of judicial reviews are just two factors that will impact supply in the market. The threat of ‘use it or lose it’ could be counterproductive, if viability is not at the core of the thinking. National minimum density requirements are also creating challenges in viability, particularly in our regional towns.
People working from home as a result of the pandemic are now looking for greater flexibility in the accommodation that they are looking to occupy. They are thinking about the function of their homes differently. It’s not just a home but a gym, office, restaurant etc so innovations in design and the arrival of the garden pod are good to see. Industry can be creative around housing typographies and inspiration is available internationally. We have seen a hugely positive reaction to some brave and contemporarily designed developments such as Annesley Gardens, Ranelagh (Seabren Developments) by Metropolitan Workshop and Sika Woods, Enniskerry (Winterbrook Developments) by Aughey O’Flaherty Architects. We have also had a huge reaction to the launch of the masterplan for Cherrywood Village by Quintain which will be an incredibly important development for Dublin and will launch later in 2021.
Some of the forced changes by the pandemic have been very positive, with greater collaboration and cohesion amongst the various stakeholders within industry, partly to get back to work but also to look at the bigger picture and broader housing need. The representative bodies such as Property Industry Ireland (PII); Irish House Builders Association (IHBA); Society of Chartered Surveyors (SCSI) and Irish Institutional Property (IIP) and others are available to compliment and assist the state agencies.
We appear to have a very capable, passionate and decisive new Minister for Housing in Minister Darragh O’Brien and a better organised private sector keen to collaborate so lets set the targets, work together and deliver the homes that Irelands current and future population deserve and demand.
Ivan Gaine, Managing Director, Sherry FitzGerald New Homes and Chairman of the Supply & Demand Committee, Property Industry Ireland (PII)
