Since 2011, the State’s so-called ‘bad bank’ of Nama has sold development land with the potential to build over 86,000 homes. However, fewer than 11,000 homes have actually been built on that land.
This information was contained in a reply to a parliamentary question to the Department of Finance by Sinn Féin finance spokesperson Pearse Doherty.
The number of new houses and apartments being built, even after the increase in output since 2017, is only a fraction of what could be built if all of the zoned land was immediately pressed into service.
So just how much zoned land is there? It may seem incredible, but the last time the Department of Housing conducted a complete survey of potential building land was its Residential Land Availability Survey in 2014, eight years ago.
Way back then, the department estimated that there was up to 27,300 hectares with the potential for 611,000 new homes available.
Of this zoned land, 2,800 hectares with space for up to 123,000 homes was in Dublin city and county, with a further 4,700 hectares with space for another 125,000 homes in the neighbouring commuter counties of Kildare, Louth, Meath and Wicklow.
So when will the department get a move on and update its Land Availability Survey?
A spokesperson points to the Department of Housing’s September 2021 Housing for All (HFA) national housing plan, which will bring us out to 2030.
“Section 5.7 of HFA emphasises the need for improved housing data to assist in housing policy development and evaluation.”
As part of HFA, the department is compiling a digital national register of zoned land, says the spokesperson. Which will no doubt be great when it’s ready – but what do we do in the meantime?
So, eight years on from the last survey, how much zoned residential land is there now available for building?
In the seven years from 2015 to 2021, more than 110,000 new houses and apartments were completed. This means that if no more land had been zoned residential since 2014, we would now have sufficient land to build just over 500,000 more new homes.
But the reality is that, until we get the results of the new survey, no one knows for sure.
New housebuilding has been stuck at just over 20,000 units a year since 2019. This looks set to increase sharply this year, with completions in the first three months of 2022 up 45pc to almost 5,700. David Duffy, of Ibec’s Property Industry Ireland offshoot, is now forecasting that 25,000 homes will be completed this year.
However, even if 25,000 homes are built in 2022, this still represents just a twentieth of the total number that could potentially be built if all the zoned land was developed.
At the individual company level, both the quoted housebuilders, Cairn and Glenveagh, have very large landbanks.
Cairn sold 1,120 new homes last year. This compares with a landbank of 17,700 units at the end of December. Even if Cairn meets its target of 1,500 completions this year, that’s the equivalent of 11 years’ output.
Glenveagh completed 1,150 units in 2021 and is targeting 1,400 this year. This compares with a year-end landbank of 16,800 units, about 12 times this year’s projected output.
So is building land being hoarded?
Remember, the Government introduced a zoned land tax of 3pc of market value in the 2022 Budget. Even so, the reality is almost certainly more complicated.
Housebuilding increased (admittedly from a very low post-crash base) for five consecutive years up to 2019. While output held up relatively well during lockdown, hopes for a further increase had to be put on hold until the pandemic relaxed its grip.
A return to something resembling normality has brought its own problems. Skills and materials shortages have pushed up building costs, with Cairn experiencing build-cost inflation of 6pc in 2021 – the equivalent of €15,000 per new home built.
Those who know about these things caution against assuming that just because land has been zoned, new houses or apartments will actually ever be built. Zoning is only the start of a long, complicated process.
Zoned land needs to be serviced with water, sewage, electricity, and so on. Then there is the process of planning, which can now take up to five years to complete. After all that, the project needs to be viable – will the sale price be greater than the site and construction costs? And if it is, can funding be secured? Only then can construction begin.
Many a slip ’twixt cup and lip.
The fact that there are currently over 70,000 un-activated planning permissions nationally adds at least some credence to the contention that the current low levels of housebuilding aren’t exclusively due to the hoarding of building land.
Do current building standards mean that many projects are not financially viable, even where planning permission has been granted?
The view among many in the industry is that the current planning system bias in favour of apartments (it now costs €450,000-€500,000 to deliver a new apartment) has exacerbated this viability crisis.