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Stephen J Bell: 'Don't let impatience kill off housing's green shoots'



Stephen Bell, founder and chief executive of Cullaun Capital. Photo: Gerry Mooney

Stephen Bell, founder and chief executive of Cullaun Capital. Photo: Gerry Mooney

Stephen Bell, founder and chief executive of Cullaun Capital. Photo: Gerry Mooney

The Irish property market received some good news in recent days, with the Economic and Social Research Institute revealing house price growth has slowed to just 1.1pc.

It also concluded that the housing market is not overvalued at present.

In addition, figures from Ireland's Building Control Management System (BCMS) show a big spike in housing starts, up 33pc year-on-year.

It's always welcome to see positive statistics, given the under-supply of housing dating back to 2010. But it's important we don't get complacent at the first sign of "green shoots".

As my firm approached the anniversary of its first loan, we held an event to discuss meaningful solutions to the Irish property market.

We were delighted to be joined by leading voices in the industry, including Fidelma McManus, (Beauchamps), Mike Flannery (Bartra Capital), Brian McEnery (BDO), Arthur O'Brien (C+W O'Brien Architects) and Derek Poppinga (Mm Capital).

A number of issues and solutions were addressed:

New typologies

Ireland is at around 60pc urbanisation compared with a typical average of 80pc elsewhere in Europe. Even after the development "boom" that pre-dated the financial crisis, Ireland had the lowest number of houses per 1,000 population in Europe.

There are predictions of Ireland's population growing by more than a million over the next generation.

We need to embrace the need for new typologies - or housing configurations - in the market. There are many different potential solutions and this is particularly evident in our cities, where we need to accept the challenge of fitting more people into smaller spaces with better facilities.

Providing a three-bed semi with garden to all is not possible as cities grow. And people want choice, so we need to understand and respond to different needs and preferences.

What will our children and parents say?

Younger people may refuse to commute for two or three hours a day to work in urban centres, for both personal and environmental reasons. They also don't necessarily aspire to home ownership.

The emergence of a "usership" versus the traditional ownership culture brings a focus more on having somewhere affordable and convenient to live that ticks the boxes that our diverse population desire.

There is a forecast increase of 150pc in those aged 65+ and 350pc at 85+ over the next 30 years. At the same time, the current stock of nursing home beds in Ireland is likely to fall as regulations aimed at "people-centric care" come into force and financial stability tests are considered.

It's therefore imperative we keep the conversation going and think creatively about where the public and private priorities should be.

If we don't, we may find we have been successful only in providing yesterday's solutions.

Where might solutions come from?

As well as new typologies, we need to think about different models of construction. The development industry came to a dramatic halt as Ireland was hit by the financial crisis, and our ability to recover has been hit by the exodus of skilled workers to other countries. This isn't unique to Ireland, but we feel it keenly as a small open economy.

Some countries facing this problem have embraced modular housing - in which large parts of a house are manufactured off-site. While the costs are similar to traditional methods, the advantage it brings is the ability to be more efficient on the building site.

Stability and co-operation

I appreciate people are impatient for solutions, but we need to grasp this opportunity to get things right. We need to have stability so the industry can commit to projects that will make a difference in 2021 and beyond.

We must avoid shooting down ideas at an early stage because they aren't perfect. Take the Strategic Housing Development (SHD) process. Some say the fact mass housing has not been delivered in three years means the SHD has 'failed'.

We believe significant progress has been made. However, significant modifications - or changes that ignore the views of those delivering housing - could put at risk schemes already in the supply pipeline.

The property market can be likened to a super-tanker. It is not designed to respond to short-term changes in direction which can destabilise it and impede its journey.

However, with stability and co-operation between public and private sectors, I remain confident that between us we can deliver the accommodation Ireland wants, needs and deserves.

Stephen J Bell is the founder and CEO of Cullaun Capital, multi-asset class development finance lender

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