Dublin housing market lurches on

It has been a week of shocks and revelations about the housing market, particularly in the capital.

The ESRI forecast 54,000 new homes were needed in Dublin over the next seven years and 86 per cent of national housing demand was in the capital and its surrounding commuter counties.

The Construction Industry Federation responded that only 2,000 new homes would be built in the Dublin area this year and developers could not access funds to build more.

The ESRI returned to say that despite a 16 per cent increase in the cost of Dublin houses last year, prices remained undervalued, albeit to a lesser extent in the capital than the rest of the country. It now emerges that Dublin has enough land zoned and ready for construction to accommodate 46,000 new homes, but only 11 housing estates of fewer than 700 homes in total have been granted planning permission in the first half of this year.

These figures should not come as such a shock. In 2007 reports abounded about the previous year’s unprecedented levels of development. In 2006 a record 19,470 homes were built in Dublin and almost 30,000 in the greater Dublin area. More than one-sixth all homes in the State were built between 2001 and 2006.

‘Ghost estates’

Then in early 2008 it emerged that just over 6,000 new homes were to be built in Dublin that year. The same year reports of “ghost estates” began to make headlines, and plans to regenerate some of Dublin’s worst social housing estates collapsed.

Building site activity ground to a halt over the subsequent years and last year just over 1,300 homes were built in the capital. But the population seeking homes in the city was increasing, most acutely the numbers needing social housing.

Ghost estates were never much of a problem in Dublin, apart from some pockets around the northern fringes of the city. So with successive years without any residential construction to speak of, it shouldn’t be a surprise that in Dublin there is a housing shortage and prices are increasing, while in much of the rest of the country there remains an oversupply. But it does come as a shock, because the standard response to problems in the housing market is to lurch from crisis to crisis without much by way of a long-term strategy. The Dublin housing supply taskforce is at least thinking about the problem, but their first analysis shows some worrying trends. Fingal, the area of Dublin with the greatest potential for new homes it not currently processing any applications for apartments.

Apartment schemes planned for suburban areas throughout Dublin, that have planning permission but are not yet under construction, are no longer considered viable. The only place where substantial numbers of apartments are likely to be built is the docklands. Houses are the easier sell, but the attachment to them resulted in the need to build farther out from the city, resulting in isolated vacant estates.

Developers

The plan to test the interest from developers for council-owned tracts of land has obvious appeal. These lands have been idle for years and in some cases local authorities are continuing to pay interest on loans they took out to buy the sites.

However, councillors’ trepidation about getting back into bed with developers is understandable, given the terrible failure in 2008 of public private partnership schemes, which left the council’s most vulnerable tenants living in appalling conditions.

The council is calling the new concept a “housing construction collaboration”. but whether it’s called a HCC or a PPP, the spectre of the year when everything went wrong will be tough to banish.