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Irish Times
6 days ago
- Business
- Irish Times
Government must bring clarity on policy to hit housing targets
The Government was elected only six months ago but is already running out of time to address the housing crisis within the lifetime of this parliament. That housing was and remains a crucial voter issue is not in doubt. Nor are the concerns of developers and investors who stand ready to assist the Government's ambition for residential delivery targets. The next three months will be critical to answering these concerns so that these housing targets have a chance of being met by 2030. Apartment construction slowing Despite the acute demand for new homes, it is startling how the delivery of housing has actually slowed within the last year. New dwelling completions nationally fell by nearly 7 per cent in 2024. In the case of Dublin apartment construction – despite the range of State-supported housing initiatives and the active capital of approved housing bodies (AHBs) – the number of apartment units completed last year dropped by 27 per cent from 2023. This slowdown will continue in 2025, where CBRE estimates a further 20 per cent decline. Beyond 2025 the pipeline (particularly for private apartments as opposed to social and affordable) will slow even more materially. Policy change that can improve viability New apartment development has been challenging since 2022, when construction costs and financing costs increased following the outbreak of the war in Ukraine. However, from a policy perspective, little has changed since then to encourage new construction in the sector. In fact, policy change has contributed to the problem. In December 2021, the then government introduced restrictive rental policies that regulate annual rent increases to the lesser of inflation or 2 per cent. Such restrictions may sound reasonable but rent-control policies have a poor track record in delivering a vibrant rental sector anywhere in the world, and the net result is less supply. Instead, it creates a market of insiders – the community of renters who benefit from the controls – and outsiders – potential renters that cannot access any product. At the time of writing, the results of a recent review of this regulation by The Housing Agency have yet to be published. We expect that investment and development in the sector will remain stagnant until there is some clarity on the future of this policy. READ MORE The VAT payable on the sale of a completed development is where there is more potential for change that could support apartment viability. In fact, we believe that of all the options available to Government, an adjustment to VAT could have the single most positive impact on improving viability. At present, a VAT payment of 13.5 per cent of the sale price is due on the disposal of a private rented sector (PRS) development (timing dependent). This, in many instances, is eroding overall development margins and thereby making many projects unviable. Decreasing this rate to at least 9 per cent would improve viability materially and would clearly help increase apartment supply. It would also increase the exchequer return from this segment of the market through both additional VAT and stamp duty because at present virtually no such sales are completing and the sector is essentially stagnant. The UK treats VAT on new development much differently. A look at their rental market would be worthwhile for our policymakers. Myles Clarke is managing director of CBRE Ireland Social and affordable housing provision The range of schemes introduced since the launch of Housing for All in 2021 to support the provision of social and affordable housing has been positive and has certainly helped to slowly turn a corner on that tenure in the market. It is estimated that up to 50 per cent of new-dwelling completions last year had some sort of State support (either financed by or acquired by State entities). The Land Development Agency (LDA) has become increasingly active, and the number of large-scale residential projects being initiated around the country is at least somewhat encouraging. However, some of these policy initiatives clearly haven't worked. A recent release of data by the Department of Housing showed no private sector take-up of funding for the Secure Tenancy Affordable Rental (Star) scheme – an affordable rental funding mechanism to support new development. The private development community clearly had an appetite to engage with this initiative, but to date, of the €750 million allocated to the scheme, just €185.3 million has been taken up, with the only party to engage being the LDA. Uisce Éireann's call for action Planning, infrastructure and utilities remain key challenges to significantly scaling up residential development across the country. In May, the CBRE planning advisory team hosted some of the key figures in infrastructure and utilities provision in Ireland for a panel discussion focused on 'accelerating housing delivery'. Key utilities for housing, such as wastewater treatment and access to the electricity grid, need to be scaled up to match housing delivery targets. Indeed, Uisce Éireann sent a detailed document to the Government last week, highlighting that the scale of the task in front of them is 'immense' and suggesting a number of planning, legal, regulatory and consenting issues that should be addressed, including fast-tracking decisions by An Bord Pleanála on strategic projects and asking for the expansion of exempt development provisions. [ Fixing 'known' water system issues will take until 2050 and cost up to €60bn, says Uisce Éireann Opens in new window ] The urgency of this call to action from one of the country's most important utility providers should serve as another wake-up call to policymakers about the need for immediate action. Time for effective action The good news is that, overall, Ireland remains an attractive destination for investors to commit funds to support the Government's policy goals. Nowhere else in the OECD offers the consistent positive growth dynamics of Ireland combined with a stable political landscape and a strong state balance sheet buffered by the fiscal surplus of recent years. However, investors prize policy stability and predictability when committing capital to an economy for the long term. Their experience of recent unexpected policy actions in Ireland aimed at countering short-term political pressures raises question marks over the reliability of the Government's intentions to address the housing crisis. Investors are committing capital to support the buildout of rental sectors in cities across Europe but can't commit in a meaningful way to Ireland's PRS sector as long as these rental controls remain in place. Time is not on our side. The lag between effective policy action by the Government and activating all the legs of housing development – land acquisition, planning, securing finance and critical service connections – means it takes three to four years to turn a plan into new housing units. The Government won a clear mandate to deliver on Ireland's housing challenge, and it is imperative to bring policy clarity to investors and developers alike, who stand ready to commit – before it's too late. Myles Clarke is managing director of CBRE Ireland
News.com.au
30-05-2025
- Business
- News.com.au
New housing approvals slip dangerously far behind National Housing Accord
Australia's housing shortage has taken another turn, with new data from the Australian Bureau of Statistics showing a sharp decline in overall dwelling approvals. The drop has been fuelled largely by a collapse in apartment construction, raising fresh concerns for young Australians already locked out of the housing market. The 'Australian dream' of a quarter-acre block was dashed for millions of Aussies long ago, but now it appears even the smallest of apartments are quickly falling off the table as well. For those born after 1990, who weren't gifted a trust fund, house deposit, or struck it big with a wild crypto gamble, the following figures will come as tough reading. The ABS figures, released on Thursday, revealed the total number of dwellings approved in April fell by 5.7 per cent to 14,633. The drop was driven primarily by a 19 per cent fall in approvals for private sector homes excluding standalone houses, which include apartments and townhouses. 'A drop in apartment approvals drove a 19.0 per cent fall in private dwellings excluding houses,' said Daniel Rossi, ABS Head of Construction Statistics. 'Meanwhile, private sector house approvals were up 3.1 per cent.' The collapse in higher-density approvals comes as Australia's population continues to surge, exacerbating what economists, social researchers and rental advocates have long warned is an unsustainable imbalance between supply and demand. According to CoreLogic, the national median dwelling value has increased more than 30 per cent since the start of the pandemic, while rental vacancies remain near historic lows. But new homes, particularly more affordable and urban apartments best suited for first homebuyers, aren't being built at a rate that reflects demand. The situation leaves younger Australians, who already face stagnant wages, high interest rates and record living costs throughout their working life, in an increasingly untenable position. Even April's modest rise in private sector house approvals, driven by 7.3 per cent increases in both New South Wales and Queensland, is unlikely to shift the dial. At 9,349 approvals, the result represents a 4.6 per cent year-on-year increase but does little to compensate for the decline in apartment projects. 'New South Wales had over 2,000 private sector houses approved for the first time since December 2023,' Rossi said, suggesting demand remains high in key states. However, critics argue that standalone homes are becoming increasingly unaffordable or geographically inaccessible for most first-time buyers, especially in capital cities. 'A key driver of recent movements has been the increased value of non-residential projects rather than the number,' Rossi explained. The numbers land amid calls for bold federal and state intervention to fast-track housing construction and cut red tape for medium- and high-density developments — reforms that housing experts argue are long overdue. 'Data confirms the federal government's failure on housing, as new housing approvals slip further behind National Housing Accord targets. The Accord has failed to deliver the level of new houses promised for the tenth consecutive month,' said Morgan Begg, Director of Research at the Institute of Public Affairs. 'Over the first ten months of the federal government's Accord, housing approvals have failed to hit a single target and are now 27 per cent behind where they were promised to be,' Mr Begg said. 'With housing approvals so low, Australia is being set up for a disaster, as in the last three years to June 2025, net migration is on track to be 1.3 million, meaning the gap between demand and supply is drifting further apart. 'Today's new figures reinforce the depth of Australia's housing crisis, brought about by out-of-control migration, a construction sector burdened by red tape, and competition for resources from large, expensive, and inefficient taxpayer-funded construction projects.' But it gets even worse. The IPA claims the time it takes to build a house, from approval to completion, has increased by a whopping 50 per cent over the last 10 years. It has shifted from an average of just over eight months in 2014 to almost 13 months by 2024. 'The federal government clearly does not understand Australia's housing market. It has overestimated the capacity to build new homes, while it has continually underestimated its migration intake forecasts,' Mr Begg said. 'It has created the perfect storm of rising prices and rents in the housing market that has put the great Australian dream of homeownership out of reach.'
