February 23, 2011
NAMA have today revealed a bit more of a detailed breakdown of the NAMA loan book in Northern Ireland and its geography. NAMA NI loans total £3.35bn (c. €4bn) and relate to 180 individuals and companies. The loan book is 5% of NAMA’s portfolio. Undeveloped land accounts for £2bn (60%), investment properties £1bn (29%), and land and property under development, £350m (10%). Just 1% relates to residential development. With respect to Geography: 32% of the loan portfolio is located in Belfast, 21% in County Down, 19% in County Antrim, 8% in County Londonderry, 7% in County Tyrone, 7% in County Armagh, 4% in County Fermanagh and 2% in the city of Derry.
What is striking here is the amount of land in the portfolio. I’m assuming that the £2bn figure is after the haircut is applied and using Nov 2009 prices. Of course the market has fallen since Nov 2009 and £2bn in today’s market will buy an enormous amount of acreage, so one presumes the NAMA holding constitutes a very sizeable landbank. Given the geographical spread of the loans, much of it has to be located in rural areas and around small towns and villages, and one presumes that it’s main commercial usage over the short term is agriculture. It would be very interesting to get a further breakdown of the size of the landbanks, where they are, and how much was paid by NAMA for the loans on them, so as to get some idea as to how they view the long term use of the land – I’m working on the principle that much larger haircuts will have been applied to land that has limited development potential and is more suited to agriculture.
The size of the land holding in the portfolio is what troubles me. It is the part of the portfolio that has fallen most in value and will be more difficult to sell on, unless an investor is prepared to sit on it for a while to let it appreciate in value. Most developers seek to turn land over quickly because it’s a sunk cost with no working return. Clearly NAMA has time to wait for the market to stabilise and recover before selling on, but even so that’s a lot of land to be managed, sold on or developed.
Clearly, one of the concerns for the Northern Ireland property market is for NAMA to destabilize it through firesales, and Ronnie Hanna, Head of Risk and Credit, who released the figures today, went on to try and reassure that this would not happen and that NAMA will act responsibly. To quote him, he said that NAMA would: “assist in the stabilisation of the property market in Northern Ireland, by providing liquidity to the market and by being able to take a longer-term approach where necessary”. That’s all well and good, but what I would like to see is a more detailed business plan as to how NAMA intends to try and realise its assets over the long term in NI given the nature and geography of the portfolio. This is likely to provide more reassurance to the property market there. At the minute we’ll still at very broad brush generalities, though at least it’s a small step in the right direction.
February 20, 2011
Posted by irelandafternama under Commentaries
| Tags: entrepreneurs
|  Comments
I almost choked on my breakfast on Friday when I read about Friends First’s economist Jim Power saying entrepreneurs were at risk of being “demonised” and “taxed off the face of the earth”
. What planet is he on? Is it the same one in which Barclays Bank can make £11bn profit but pay only 1% tax
? Or the one where the CEOs of prominent Irish companies make €1m+ salaries
? What multiple of the average industrial salary, or for that matter the (now-reduced) pay of the minimum wage worker, does JIm Power think it’s appropriate for the entrepreneurs to earn? Is 100 to 1 not enough? Or should it really be limitless, as is actually the case? Just how much money do the entrepreneurs need? For how much longer can we all pay for them?
Taxed off the face of the earth indeed. Hilarious. If it wasn’t so frightening. Because what Jim Power seems to call for is the same version of laissez faire capitalism / light-touch regulation / low-tax economy dogma that got Ireland into the mess it’s now in. Correct me if I’m wrong – after all, given the spirit of the election debate up to now, I wouldn’t be surprised if public sector workers are blamed for it – but exactly which class of society was it that ran up the massive debts, lent out the money to the developers, or borrowed the vast sums for their clever plans?
So the orthodoxy lives on. And it looks like folks are going to vote for more of it. The main parties are all committed to repaying the bank debt, albeit whilst renegotiating the bailout as best they can. Let’s not beat about the bush, though: a class of a few hundred or so entrepreneurs can eat and drink and buy cars and houses and holidays and enjoy fat bonuses for making big profits that, oops!, suddenly turn into losses (almost €18bn at Anglo Irish, which we are expected to pay) that they pass on to the citizenry. Privatized profits, socialized losses. Laissez faire capitalism / light-touch regulation / low-tax economy dogma. And what does the party tipped to lead the next government want? More of the same. In its manifesto [in which economic/economy is mentioned 98 times and business is mentioned 89 times while equality/fairness/justice are mentioned just 7 times], Fine Gael says it wants to ‘make Ireland, as it was in the late 1990s, one of the best countries in the world for doing business’. Scary. Wasn’t Ireland in the late 1990s just an earlier, pre-crisis version of the monster that eventually emerged? A laissez faire capitalism / light-touch regulation / low-tax economy dogma regime built on enabling corporate tax avoidance, befriending footloose financiers, and scamming the neighbours?
Ah but sure the new government will have a plan to cut public sector jobs (and pay?). And it will aim to lower taxes, as if it’s high-tax economies that cause all the problems. But €100bn is €100bn. Someone will have to pay. Who, then? Answer: We’re all going to pay. Unless we leave. Certainly that’s the plan for many. Emigration, escape, call it what you will. Jumping ship might be an appropriate term.
But we can’t all leave. For the SWINE (squeezed workers in negative equity), jumping ship won’t work. The SWINE will stay and pay. And the entrepreneurs?
February 18, 2011
Several newspapers (e.g., Irish Times, Independent, Examiner) are reporting that the Advisory Group on Unfinished Housing Developments has published its draft report today. I’ve searched the DEHLG and Housing and Sustainable Communities Agencies websites but can’t locate it as yet (the main page for unfinished estates on the DEHLG website is here). Going on what the newspapers say, there are 348 developments that are in need of immediate action to deal with public safety hazards (e.g., unsecured construction materials, open excavation pits, uncovered manholes, and partially completed buildings that could be unstable) where no current on-site work is being undertaken and the vacancy rate is over fifty percent. These estates may also suffer from a lack of public lighting, problems with water and sewage services, poor road surfaces, lack of pavements, and a lack of open areas. The identified developments are in every county, with particularly high numbers in Cork County (52), Cavan (34), Galway County (20), Dublin (the 4 LAs, 30), Donegal (23), Louth (17), Longford (16), Monaghan (14). Individual estates are not identified.
Minister Finneran has announced a fund of €5m for local authorities to use to help address the worst of these problems. Whilst the fund is very welcome, it only averages €14,360 per estate. For that kind of money one would think that the issues would have been addressed already and it seems highly unlikely that all the issues can be tackled for that sum. That said, it can certainly be used to address the worst of the problems, especially those that pose safety threats. However, the bigger and longer term issue of how to finish out estates still needs resolution. The draft guidance manual published late last year provides one roadmap, though as we noted in our own submission is far from ideal.
The issue of dangerous and developer abandoned estates is also far larger than the 348 estates identified; these are the worst estates that have the most problems. Lots of other estates have many of the same issues and using the criteria of 50% occupancy seems a rather arbitary way of delineating the level of risk. One could have an estate of almost full occupancy with a very severe hazard in it that needs urgent redress. Our analysis of the unfinished estates database shows that:
- 1,475 estates have uncompleted properties on them; 71% of these estates are non-active, i.e. they have effectively been abandoned by the developer for the time being
- 635 estates have more than 50 per cent of units under-construction
- 777 estates consist of 10 or more units where 50 per cent of units are either under construction or vacant (i.e. they are ghost estates as we originally defined them last January)
- 2,157 estates have residents (78,195 households)
- 1,102 occupied estates are complete but have vacancy
- 1,055 occupied estates are incomplete and may also have vacant units (454 occupied estates have more than 30% per cent of units in-complete)
Chairman of the advisory group John O’Connor, chief executive of the Housing and Sustainable Communities Agency, quoted in the Irish Times, himself acknowledges that the issues extend beyond the 348 identified estates, stating that local authorities were best placed to advise which estates in their areas were most in need of, or would most benefit from, funding to resolve public safety issues. In other words local authorities seem to be in a position to assess estates on a “site by site, case by case” to draw on the fund to address issues.
The key issue now is for Local Authorities to start drawing down the funding available and to address the really pressing health and safety issues in order to improve the lives of residents.
February 17, 2011
Posted by irelandafternama under Links
| Tags: Ballymun
| 1 Comment
In the context of the recent financial meltdown, widespread unemployment, and the proliferation of unfinished estates, the problems associated with existing areas characterised by poverty and structural disadvantage have not vanished but rather been submerged beneath the mainstream discourses of the crisis; in much the same way as they were submerged beneath the mainstream discourse of economic expansion and wealth creation during the Celtic Tiger years. A fascinating collection of photographs depicting “youths coming of age in a world of drugs, gangs and arson” in Ballymun by artist Ross McDonell offers an arresting reminder of the other side of the Celtic Tiger. ‘Joyrider’ presents frank portraits of vandalism, dereliction and crime in the lives of children and young adults growing up in Ballymun. ”These pictures document the transition from anti-social behaviour to criminality, from childhood to adulthood without a ‘youth’ in between,” says McDonnell. Yet, in an interview in the New York Times, he also infers a sense of community within this ritualistic culture. “I felt that one of the consequences of the huge changes brought about by the Celtic Tiger was a loss of some of the things that defined us as Irish… One of these things was our sense of community spirit, that notion that we were all in it together”. These are pictures of communities on the margins of the boom who remain marginal in the aftermath of the crash.
Cian O’ Callaghan
February 15, 2011
Minister for the Environment, Heritage and Local Government, Éamon Ó Cuív and Minister for Regional Development Conor Murphy MLA announced today that a joint consultation on a Framework for Collaboration on Spatial Strategies for the Island of Ireland will commence on Tuesday, 15 February for an 8-week period.
As the press release states: ‘The consultation document identifies key planning challenges faced by both jurisdictions and discusses the potential for collaboration in spatial planning. It sets out a non-statutory framework for collaboration at different levels within the public sector which should result in mutual benefits.’
It continues: ‘Welcoming the public consultation process, Minister Ó Cuív said: “The island of Ireland faces considerable challenges in building a sustained economic recovery in a future that will be increasingly dominated by globalisation. One of the ways the island will flourish will be through practical co-operation between north and south in meeting the planning, investment and environmental management needs of today in a way that will turn into the economic and job creation opportunities of tomorrow.
“I believe that the new Framework for Collaboration will deliver a real step-change in planning for this island, harnessing the complementary strengths of both rural and urban areas and delivering real mutual benefits at both a local border level and the larger island level. For example, more effective sharing of information between planning systems north and south on economic, housing, transport and environmental trends will enable a more joined-up approach to planning in border areas.
“Furthermore, the framework provides a mandate for practical co-operation on planning and infrastructure co-ordination within border areas and beyond.”
I should be clear to declare an interest in this. NIRSA is a partner institution in the International Centre for Local and Regional Development (ICLRD) – along with University of Ulster, Centre for Cross Border Studies, and the International Institute of Urban Development (based in Boston) – which undertook the research and wrote the original framework report, which was commissioned in 2006 by InterTrade Ireland. The research argued for a collaborative approach to spatial planning on the island of Ireland, and the advantages of joined up thinking on all-island basis in relation to planning and development, particularly in the context of globalisation and the need to enhance collective competitiveness. As the press release says: ‘On the island of Ireland, creating a competitive and high quality environment for economic development through collaboration on strategic planning and infrastructure investment are key areas where Northern Ireland and Ireland share opportunities and challenges.’
The consultation document is available to view and download here. For those interested the original, longer report – Spatial Strategies on the Island of Ireland: Development of a Collaborative Action – published in 2007 it can be downloaded here (note: submissions are in relation to the consultation document which has come through several stages since, not the original report).
Submissions or comments on the consultative document should be sent to the contact address below by 11 April 2011.
Mr Eoin Bennis,
Planning System and Spatial Policy,
Department of the Environment Heritage and Local Government,
February 10, 2011
The recent An Taisce submission to Dublin City Council mentioned on this site in the last few days makes for very interesting viewing. It is a fascinating and detailed insight into the lack of planning enforcement in parts of Dublin city centre in recent years. While agreeing that planning enforcement and architectural conservation are both extremely pertinent issues, I feel the submission raises important questions about exactly what is, or should be, enforced in the first place. Although An Taisce emphasise shopfronts and signage, they also take issue with the amount of fast-food, convenience stores, and discount shops, which are collectively referred to as ‘lower-order’ shops, within the streets that are surveyed (Westmoreland St., Dame St., Parliament St., and the South Quays between Westmoreland St. and Parliament St.).
Throughout the document, An Taisce focus on the connections between poor signage, planning enforcement, and quality of land-use. A key factor which they highlight is how many of the offending businesses are fast-food or convenience stores. They also try to push the link further. For example, in the first part of the document, they state that “The lack of enforcement and active management of streets is a contributing factor in the ongoing loss of independent shops and businesses with ‘personality’ – as exampled by the recent closures of the Gruel and Mermaid Cafe restaurants on Dame Street.” Unfortunately, why this is the case is not expanded upon. Perhaps, when looked at on a broad level the so-called lower-order shops are better able to pay higher rents, thus placing pressure on the independent businesses? However, the exact nature of the connections between land-use, vacancy, and enforcement is something that I would argue needs far greater amounts of scrutiny.
Moving beyond issues related to enforcement and signage, the submission raises some pertinent questions about what are deemed to be acceptable and unacceptable forms of land-use in Dublin city centre (here I am referring to the broad approach to planning in Dublin). Following from the work of Brian J.L Berry, the definition of lower-order and higher-order goods (and shops) used within Scheme’s of Special Planning Control by Dublin City council is as follows: “Lower order goods are those goods, which consumers need frequently and therefore are willing to travel only short distances for them. Higher order goods are needed less frequently so consumers are willing to travel further for them. These longer trips are usually undertaken for not only purchasing purposes but other activities as well.” In practice, lower-order shops have come to mean the likes of fast-food stores, convenience shops and discount stores, or anything else deemed undesirable in the city centre retail environment. The reasons for their domination in particular areas is often linked to a combination of market forces and a lack of planning enforcement. The reasons often cited for why the concentration of such uses is deemed undesirable in the first place is that they are perceived to be connected to the economic decline of the city centre, due, in part, to their appearance (health issues, particularly in relation to fast-food, might also be a fair argument, but do not seem to ever have been raised as a factor. It would also prove a particularly difficult issue to address). Again the causal relationship here needs more detailed scrutiny, and surely proper enforcement of acceptable signage would serve to address questions of appearance.
Following from the above, and for the purposes of clarity, the issue might be divided into two overlapping, yet connected, sub-issues. On the one hand, there is the location of more permanent uses, such as fast-food and convenience stores. On the other hand, there are the temporary uses – often discount stores – which tend to operate within recently vacated stores (and often for prolonged periods). Focusing on the former, there seems to be a need to question the actually existing relationships between different land-uses within the city centre. To speculate on this, is there not a connection between fast-food and pubs/bars in a city which, since the early 1990s, has been re-orientated towards the night-time economy? In short, a starting point might be to address why these so-called lower-order functions seem to locate on the main thoroughfares in the city centre. It does not seem enough to conclude that their mere presence is a cause of economic decline. Leading on from this, and to comment briefly on the second sub-issue raised above, another important question might be orientated towards the dominance of temporary stores in recently vacated premises; ie, what are the predominant factors in these premises becoming vacant in the first place? This would include, but expand on, the issue of rents. Moreover, how can those proprietors responsible for the uses which are now there be enticed to take a more active interest in their shop-front and surrounding street.
I am not trying to state that certain parts of the city are inherently suited or given over to particular forms of land-use. Nor am I in favour of a laissez-faire approach. I do feel that there is a need to question with a great level of detail why certain types of retail or related functions are drawn to particular parts of the city, why exactly their presence is perceived as negative, and what impact their removal might have on the city centre.
February 8, 2011
Two pieces in the Irish Times today about zoning and planning enforcement; another a couple of days ago in the Examiner about planning permissions. All three raise some questions with regards to the planning system.
Story 1. The Sisters of Charity are up in arms about Dublin City Council’s rezoning of their 108 acres of land in 18 parcels in the city. It has been classed as Z15, which means that if developed it has to have a greater proportion of open space and affordable housing. They are arguing that the 2011-2017 development plan is ‘diverting private property into public ownership and ‘steralising’ its lands without compensation’. They claim the plan is illegal as ‘applies a restrictive zoning to an arbitary selection of lands’. The IT reports that they want the rezoning quashed, a stay put on sections of the plan affecting their property, and ‘damages for alleged breaches of private property and religious freedom rights under the Constitution and European Convention of Human Rights’. It’s the same rezoning that RTE are challenging.
Development from Google Street View
Story 2: The Examiner reports that Athy Town Council have endorsed an application to build 8 additional properties on an estate where ‘residents have lived for three years with unfinished roads, incomplete public lighting and inadequately secured construction sites’. There were 27 objections to the application, with residents concluding that the “Approval of this application is tantamount to endorsing the dangerous and reckless abandonment of site works.” The senior planner for the council concluded on a site visit that: “Any unfinished areas have been fenced off and the site is kept relatively tidy.” One resident notes: “It’s very frustrating. Since we moved in 2007, nothing has been done. I am still looking out on the shells of three unfinished houses, gardens are not maintained, sections of footpath unfinished, the green area out front is without public lighting. It really has been left very shoddily.” Clearly the residents and the planner agree that the existing site is still unfinished and some houses in the earlier phases are still vacant, which begs the question as to why give an endorsement to the next phase?
One of the shop fronts An Taisce objects to
Story 3. An Taisce has accused Dublin City Council of neglecting planning provisions with respect to unauthorised shop fronts and signage, and of failing to take enforcement proceedings against signage erected without permission or which had been refused permission. In particular, they highlight the state of the main thoroughfares to the south of the Liffey – Westmoreland Street, Dame Street, Parliament Street and South Quays – an area of major civic and architectural importance, and a core area for tourists. They argue that these streets are becoming dominated by low-order shops – mostly fast food and convenience stores – which are competing against each other through garish signage. This signage is transforming the look and feel of an important part of the city.
These three stories relate to three core areas of planning: zoning, permissions, and enforcement. They are three snapshots of a regime that is creaking along under old values and practices, that needs a branch and root review and updating for the twenty first century. All political parties are promoting quite radical reform of a political system that is not fit for purpose. It’s time we had a look at what works and doesn’t work in planning in an era when many planning tools are inappropriate or blunt (for example in relation to addressing the problems of unfinished estates) or have not been used in any kind of effective way in a very long time (e.g. enforcement). And we really do need to move from individualism to utilitarianism as a guiding ethos.
February 4, 2011
Last night I went in search of party political manifestos. Given that we have long known an election was coming, I thought that every party would have had their manifesto prepared for their campaign launch and it would be relatively straightforward to download them from their websites. Some hope. After much hunting, I didn’t find a single one! If a party can’t even have a manifesto ready for an election campaign that they have long known was coming, what hope have we of them running the country properly?
But I digress. What I wanted to look up was each party’s housing and planning policies.
Fine Gael’s website has a ‘five point plan to recovery’ covers jobs, budget, health, public sector and politics. In its policy document section it has a piece on management companies and another on repossession of the family home. That’s it.
The Labour Party have three sections on policy – policy for jobs, policy for reform, policy for fairness. None of them contain policy documents focusing centrally on housing or planning. There is no manifesto to download as yet.
Fianna Fail state: ‘We will be launching our plan in the coming days. Please check back later to find out more.’ Cunningly it has no links to any policy document or to a manifesto!
The Green Party states: ‘Over the next four weeks, the Green Party will be outlining its plans to renew Ireland. All of our policy documents and manifesto will be published here.’ On their main site they detail policies in a number areas, including housing in outline form.
Sinn Fein have a ten point plan for jobs and outlines of policy initiatives across a number of areas. In outline form they list a number of housing policy ideas.
So beyond the fact none of them have published manifestos as yet, and in terms of what they are presnetly focusing on, why isn’t housing and planning seen as a prime election issue – or at least a second-tier issue after jobs, the economy and political reform, that is worthy of some mention?
Many people are homeless, there are more than 120,000 households on the social housing waiting list, and a large of stock of social housing needs renewal due to its poor state. Over 90,000 households are in mortgage arrears, 36,000 of which are over 90 days in arrears. There are over 78,000 households (over 200,000 people) living in the 2,846 unfinished housing estates in the country, suffering issues of health and safety, anti-social behaviour, unfinished utilities, defunct management companies, and negative equity. Given some overlap in the households facing these issues, there are upwards of 250,000 households – 700,000 people – facing serious housing problems that need redress. That’s a large constituency of voters.
And yet, no political party has set out a full and comprehensive set of policies on housing issues, beyond some basic outline statements. For anyone with a pressing housing issue, whether it’s the threat of repossession, homelessness, poor quality or inappropriate housing, or living with unfinished developments, they want to know in specific terms how any new government is going to address the various housing issues they face on a daily basis.
The catastrophic failure of the planning system helped get us into the mess we’re in. And all through the bust local authorities continued to zone unneeded and inappropriate land and award planning permissions. A good, robust planning system will help us get out the crisis by having sensible and coordinated development in the future that is mindful of the economic, social and environmental costs of laissez faire and poorly regulated planning. Bad planning affects everyone. It is vital that reform of the planning system is undertaken to provide a system fit for purpose in the 21st century.
No political party has set out a full and comprehensive set of policies on planning. To me this extremely worrying. It’s as if planning is disconnected from development, recovery and growth – that things don’t need to be planned. It certainly was disconnected during the boom, hence the bust. And it has continued to be through the bust so far.
What is extremely troubling is that all parties are heading into this election without comprehensive policies set out in relation to critical aspects economic recovery and everyday life – planning and housing. And I do mean comprehensive policies – concrete actions and programmes that will address specific issues – not soundbites. Perhaps in the coming days the parties might set these out, but I’m not holding my breath. My sense is they’re not going to be able to get beyond soundbites, if they manage those.
February 3, 2011
There seems to a lot of revisionist history going on over the last few days. First the CIF yesterday published a report on future housing supply in the country, arguing amongst other things that “County Galway is facing a chronic shortage of new homes over the next six years”. Now this just seems like the definition of irony in the current climate, akin to suggesting that someone with health problems due to chronic obesity needs more cheeseburgers or that the insomniac needs more coffee. As Rob Kitchin suggests, the CIF report is focussing on new homes exclusively and ignoring second hand homes in coming to their conclusions. Well, it may just be me but I was under the impression that houses had a longer lifespan than say cabbages; they don’t suddenly go off after a couple of months or years – if they do then we have some serious questions to ask the banks handing out 40 year mortgages – but that they were more or less ‘built to last’. We don’t necessarily need our houses fresh from the grocers.
And then today, the Independent published an article by former chief economist of the Central Bank Tom O’Connell suggesting that one of the main factors contributing to the property bubble was “restrictive land zoning”. He argues that the ability of large developers to bank large parcels of land in the cities and drip feed it on to the market was enabled by restrictive zoning policies. It’s hard to believe that I am even living on the same planet, let along country, as the originators of these statements.
While O’Connell’s arguments re zoning make some sense in a roundabout manner, they fail to acknowledge a range of factors. Land-banking has certainly been a pertinent issue which has undoubtedly contributed to driving up the price of property. However, his argument hinges on the assumption that supply and demand were somehow logically correlated during the boom. If this was the case then we wouldn’t have an oversupply of some 120,000 properties at present. Supply and demand are coupled in the sense that there was a demand in the early 1990s and there has been a supply ever since. In the rural renewal counties “restrictive zoning” was certainly not an issue, yet these areas are characterised by massive oversupply. At a certain point the price of land became dissociated from any reasonable demand for it as speculation pushed property into the stratospheres of what Tom McCarthy glibly describes in his novel Remainder as “imaginary futures” that are not valued “by what they actually represent in terms of goods and services”. The suggestion that more liberal zoning policies could have prevented the property bubble is indicative of a blind neoliberal assumption in the ‘logic’ of the market, which, in light of the global crisis, is all too obviously unfounded.
The Irish experience begs for more and not less regulation. Rather than zoning more land, the Government would have been better served to implement the recommendations of the Kenny report on the sale of land or to put in place more restrictions on the time period a parcel of land will remained zoned without development taking place. The CIF’s report induces further bafflement. They just seem to be roaming around the detritus of a party the morning after, shaking the bodies of the shell-shocked hungover revellers desperately trying to get them to do another shot of tequila to get the queasy party up and running again. The last thing we need at the moment is to be hitting the property bottle.
Cian O’ Callaghan
February 2, 2011
The CIF have just published a report ‘Future Housing Supply in Ireland‘. Their main argument is that there is between 6 months and 4 years housing supply across the country and yet housing building has all but stopped except for a limited number of one-offs (80% of units built in 2010). In particular, Limerick City, Wicklow, Kildare, Limerick County, Cork City, Waterford City, Greater Cork, Kerry, Galway City, South Dublin all have less than 6 months supply. Meath, Clare, North Tipp, Fingal, Cork County, Mayo, Dublin City, DLR, Galway County, Westmeath, South Tipp all have less than 12 months supply. In other words there is an urgent need to start building houses again in a number of places around the country as there is a very real danger of running out of supply in these areas (see Figure 1). The report is an interesting lesson in how to combine and spin data for a particular vested interest purpose.
CIF housing demand projections
Principally what CIF have done is taken the DEHLG unfinished estates survey data and matched it to the target population projections in the Regional Planning Guidelines. There are three main issues with this.
First, it tries to reduce housing supply to the overhang of unsold new housing, ignoring the bigger issue of oversupply (all units inexcess of a base vacancy rate). The DEHLG itself calculates that oversupply (122-147K) is significantly higher than overhang (43K) – see our key housing stats post. As we have argued at length elsewhere to try to ignore the issue of oversupply and only focus on brand new houses is a massive folly as it only considers one part of housing stock.
Second, it assumes that the population growth targets issued to Regional Authorities in 2009 are realistic. These projections were based on 2002 and 2006 census data when there was significant population growth. The demographic shifts occuring in Ireland in 2011 are very different to that period. We are back into a period of emigration and the projections are almost certainly over-estimates.
Third, the wider economy is in the middle of a severe recession. It is very difficult to source mortgage credit, unemployment and underemployment is high, and the next generation of first time buyers are emigrating. There is little to no credit for investors. The housing market is simply flat.
In other words, the data entering the model is on the one hand selective and on the other suspect, and the study ignores the general context of the wider economy. CIF have been telling us for 12 months plus now that we only have 6-12 months supply in some areas of the country. It seems barely credible to argue that many places will run out of housing in 6 months time. This is simply is not going to happen given the levels of oversupply, emigration, stagnation in the housing market, and the state of the wider economy.
Census 2011 should give us a good idea as to where we are with housing and population/household demography. Once the data is released our housing supply/demand models can be recalibrated and we’ll have a better idea as to what kind of building programme we’ll need. Regional Planning Guidelines and Local Area Plans should then also be recalibrated. I seriously doubt we need to panic about supply until we have that data. If the CIF want a case for stimulus, it might have much more credibility arguing for investment in infrastructure than housing. The solution to an oversupply problem is not to produce more supply, it is to work it off.