Developers reluctant to build apartments, new figures show
Planning permission for apartments up just 2.7 per cent year on year in second quarter
Despite the dearth of supply in new homes, the pipeline of new apartments appears sluggish at best, according to new planning permission figures.
Planning permissions are rocketing, with a 42 per cent increase reported in the year to June 2017. However, it’s unlikely to feed into a significant bump in supply with figures showing that the vast majority of permissions being granted are for houses, not apartments.
According to latest figures from the Central Statistics Office, in the second quarter of 2017 planning permissions were granted for 4,453 units, up by 41.8 per cent on the same period in 2016. Houses accounted for the vast majority (82 per cent) of permissions, and the rate of growth is strong, up by 55 per cent on 2016. Moreover, one-off houses accounted for 28 per cent of all units being granted planning permission.
But despite the dearth of supply in new homes, the pipeline of new apartments appears sluggish at best. In the second quarter of the year, permission for just 823 apartments was granted, up by 2.7 per cent on the same period in 2016, but down by 8 per cent on the first quarter of the year. Planning permission for apartments reached a low of 92 in the first quarter of 2012, and while they have advanced since, have yet to recover at the same pace as houses.
Developers argue that apartments are financially too risky and expensive to build, with developers required to fund and build an entire block before they can start selling them off. A a recent study carried out by officials in the Department of Housing found it was not financially viable for builders to construct “affordable apartments” with sales prices of between €240,000 and €320,000.
Moreover the Construction Industry Federation (CIF) recently argued that parking spaces for apartment blocks can cost property developers up to €100,000 each, which makes such developments increasingly unviable.