The chief executive of one of the country’s largest homebuilders has called on the Government to relax planning rules so that more suburban houses can be built instead of apartment blocks.
Stephen Garvey, CEO of listed housebuilder Glenveagh Properties, said the planning system was the biggest inhibitor of increasing housing stock and development density because it favoured urban apartment building.
He said apartments were too expensive to build and were not sufficiently supported by demand either from individual homebuyers or institutional investors.
Commenting on Glenveagh’s interim results, Mr Garvey said favouring “own door” housing would better serve consumer needs and incentivise developers to build more units, helping alleviate the housing crisis.
“Urban apartments are challenging to develop in this environment, particularly with inflation, and particularly with the amount of capital they require,” he said.
“We think that needs to be reformed as quickly as possible to lock up being able to supply more own door housing into the system, which both caters for the sector and its capabilities… as well as consumer needs.”
He forecast that new housing starts would fall from a peak of 35,000 in February to 25,000 at the end of the year and blamed the drop-off on a poor mix of urban apartments and “own door housing for consumers”.
Glenveagh Properties saw its revenue and profits jump significantly in the first half of the year as demand for housing soared amid continued tight supply.
Core revenue at the housebuilder rose 57pc year on year to €200m in the six months to June.
The company got €111m of that revenue from urban development, with the remaining €89m coming from suburban housing.
While gross margins were very strong at 16.5pc, that was a fall of 0.3 percentage points over last year, despite a 202pc increase in profits to €13m for the first half.
That erosion was due entirely to margins on urban units reverting to what Goodbody called a more “normalised 15pc”. Suburban margins, however, shot up by 1.1 percentage points to 17.3pc, making Glenveagh’s preferred housing type far more profitable than the apartments favoured by the planning system.
Glenveagh now has a forward order book of €588.1m for 1,831 suburban units.