Infrastructure constraints, a lack of international finance and the prolonged time it takes to navigate the planning process are making it impossible for Government to meet its housing targets, one of the country’s leading builders has told an Oireachtas committee.
Glenveagh chief executive Stephen Garvey said the industry was operating under “a major but rarely-discussed contradiction”.
“Ireland needs thousands of homes quickly, but it also wants these homes built under an increasingly stringent rule book, while being delivered at the lowest possible price, and [often with an attitude of] not in my back yard,” he said at a meeting of the Oireachtas housing committee on Tuesday.
“These aims are understandable and laudable. But they are fundamentally incompatible with each other and cannot all be delivered at the same time.”
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He accused a “planning elite” of insisting on “perfection ... even if this means the progress we all seek and need is delayed or even stamped out completely”.
Planning delays are also adding tens of thousands of euro to the purchase price of homes when they are eventually built, he said.
Regarding a development the company was seeking to progress in Co Clare, he said the two years it had taken to complete the planning process to date had added about €30,000 to the ultimate price of the homes.
Local authorities were repeatedly criticised by the various industry representatives at Tuesday’s hearing for their failure to zone more land for residential building. The shortage of zoned land was said to be approaching “crisis point” and more than one company executive questioned the level of desire at local government level to see more homes constructed in their areas.
Madeleina Loughrey-Grant, chief strategy and sustainability officer at Cairn Homes said public investment in infrastructure was key. She cited London’s Elizabeth rail line which, she said, had enabled about 55,000 homes to be built within a kilometre of a train station.
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Ms Loughrey-Grant said there were many instances of big infrastructure deficiencies. In one, an estate in Portlaoise, Co Dublin could not be connected to the electricity grid because the local substation did not have the capacity.
Meeting the Government’s housing target of an average of 50,000 new homes between this year and 2030 would require a high proportion of apartments but, without international funding, these would be very hard to deliver, the committee heard.
Michael Stanley, chief executive at Cairn, said even a substantial housing development might involve an initial investment of between €10 million and €15 million, with the first homes completed being sold to fund the rest of the project.
A substantial apartment development, on the other hand, could involve an investment of between €80 million and €100 million. Investment from the sort of big overseas funds that have largely abandoned the market here in recent years would be required if such projects were going to make up a substantial part of residential construction in the coming years.
Michael Kelleher, president of the Irish Home Builders Association, said he expected the number of homes completed this year to be in the “low thirties” of thousands.
The committee heard that the companies have the ability to expand if barriers to ramping up building were addressed. Mr Stanley said that, contrary to some commentary, “labour is not a massive constraint”.
What were described as Ireland’s high minimum standards for apartments were criticised. Mr Garvey said changes to regulations had previously “removed choice” because the government had effectively said “if it’s not going to be a Mercedes Benz then it’s not going to be built”.
He disputed the perception that the industry was highly profitable, however, saying that since 2017 his company had had a turnover of €3.5 billion and profits of €217 million.
“That’s a return of 6 per cent. If we had put our equity in the banks, we would have made just as much and that’s why the others aren’t coming over the hill ... because the returns aren’t there.”
