Property development is being held back by high construction costs and planning uncertainty, with access to finance low on the list of concerns for developers, a survey by EY has found.
An estimated €140 billion in public and private funding is needed to deliver the Government’s target of 300,000 new homes by the end of 2030.
The State has earmarked about €40 billion for housing in the National Development Plan and implemented residential policy measures to encourage institutional property investors into Ireland to bridge the €100 billion gap.
However, a survey by EY Ireland has shown only 4 per cent of developers and State entities involved in housing delivery and the wider real estate sector believed access to finance was their “most constraining” issue.
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Construction viability and delivery costs, which recent Society of Chartered Surveyors Ireland research said were rising at the fastest rate in several years, were listed by 44 per cent as their biggest impediment, while 33 per cent said it was timelines and uncertainty in the planning system.
The next largest barriers to delivery were zoning and land use requirements, at 7 per cent, and grid or utility infrastructure availability, at 8 per cent.
Following Government reforms in 2025 that overhauled rent controls and cut VAT on new apartments, in a bid to encourage private capital to fund residential projects, only 4 per cent of respondents said residential policy or rent regulation was their biggest issue.
The research was led by EY Ireland’s head of capital and debt advisory, David Martin, and its director of capital and debt advisory, Michael Armstrong, who said respondents felt there was growing lender appetite for Irish property projects.
Martin said residential projects were being particularly affected by construction viability issues.
“It doesn’t matter how many lenders or third-party equity providers are in the market,” he said. “No finance structure is going to make a scheme more viable if the costs are out of kilter because the finished asset just isn’t profitable for the developer.”
He said the positive sentiment among respondents towards availability of finance was linked to them becoming “more comfortable with the non-bank lending” in the past six to nine months.
“They’re getting more used to transacting and negotiating with non-bank lenders, with the benefit of advisers,” Martin said.
“They’re also getting more comfortable with third-party equity that’s coming into the market from overseas. That is why access to finance suddenly isn’t as big a problem as it used to be.”
The survey also showed 52 per cent expected to seek new debt for acquisitions or development in the next year, with 18 per cent focused on refinancing existing facilities. Meanwhile, a further 11 per cent intended to reduce their leverage.
Respondents also gave mixed views on the impact of the new Planning and Development Act 2024. A total of 37 per cent reported improved clarity or fewer judicial reviews, while an equal proportion reported no direct or observed impact.
The survey, conducted before the European Central Bank’s (ECB) interest rate rise in September, also asked respondents if the rate increase in June changed their outlook on Irish real estate financing conditions.
It found 70 per cent were somewhat more cautious following the ECB’s decision while the rest said their outlook remained unchanged.
“Chief financial officers are telling us [interest rate increases] are really important and something to be mindful of, but actually what they’re looking at more so is their funding packages,” Martin said.
“They’re looking for flexibility of terms and conditions on the funding package. So interest rates are obviously hugely important, but actually the flexibility you get from the lenders is as important.”
