The industry has moved past Covid-19 disruptions but now the impact of disruptive global events present new challenges to inflation and supply lines management. How can homebuilders navigate these challenges?
In 2022 our industry produced c. 30,000 new homes, a yearly increase of 45 per cent according to the CSO. This is a huge achievement and proves our members are responding wherever possible to bring forward new homes.
Today, homebuilders throughout Ireland are mainly concerned about the sustainability of their businesses and the ability to keep a pipeline of work for the future of their companies.
The main concerns I hear about from our members are around the failures of our planning system, sourcing new development land opportunities and in many cases project viability. There is an ever-growing frustration with our planning system and our legal system, due to the delays that homebuilders are experiencing and the implication this has for the sustainability of our sector.
More importantly, this is having a detrimental impact on our wider society with people trying to find basic accommodation to live in. We have to learn how to balance the rights of people who need a home with people who do not want new developments built. The failure of our system to provide a pipeline of planning consents negatively impacts the supply of new homes of all tenures to the market, while at the same time our population continues to grow.
In a recent report The Housing Commission suggest that Ireland may need 62,000 homes built per year up to 2050. The IHBA would agree that the targets ought to be set at this level. Furthermore our Taoiseach has suggested that we have a deficit of approximately 250,000 homes.
We have concerns around growing development costs and the holding costs of work in progress. All of these issues are leading to the ongoing viability and affordability conundrum.
What can members do?
Several initiatives to support the development of new homes have been put in place by the Department of Housing. The success or failure of these new schemes will ultimately be judged by the uptake of these proposals.
One such support that is helping home buyers is the First Home Scheme, which is effectively a State backed shared equity scheme for new home purchasers. This scheme is gathering momentum and has been well received.
The real challenge now is how do we manage our cost base and expedite apartment projects that are clearly never going to get funded without government intervention?
Thankfully the Department of Housing has brought forward new schemes to help assist delivery such as HISCo (Housing Infrastructure Services Company) along with Croí Conaithe and Project Tosaigh.
We need to address and focus on the many supply side issues that we can control, such as the quantum of zoned land, the lack of investment in our critical housing infrastructure, the reform of our planning system and reducing costs.
What extra considerations do IHBA members need to take account of compared to the wider construction industry?
Many of the issues faced by the IHBA are the very same as the wider construction industry. For example the failures in our planning system are not just housing related, they extend into almost every part of our industry from the ground up.
Planning uncertainty and delays with road, rail, water, waste water, energy and utility projects as well as community amenities are having a huge impact on companies trying their best to retain talent and plan for a future pipeline of work to ensure teams can be kept going in a sustainable way.
There is a need to deliver planning permissions urgently and deploy the capital that is allocated with the NDP to ensure that infrastructure is delivered so that homes for young families can be delivered at an affordable level.
During Covid lockdowns many members saw employees leaving our industry to work elsewhere. We have to figure out a better way to make sure our country can develop in a streamlined and sustainable way, noting the need to address the environment and our climate change commitments.
We really need to figure out how we stabilise our housing output. Irish homebuilders are different from other parts of the construction industry, in that our members are largely dependent on the new homes buying market.
Our housing business model is very much dependent on what people can afford to pay. This can be volatile and there are a lot of risks associated with the market place we work in, hence developing new homes is at the higher end of the risk scale in terms of the construction sector as a whole.
Policy and planning reform has a huge impact on the industry but in what areas do homebuilders feel these pressures more acutely?
Our most immediate concern are the log-jams at An Bord Pleanála. There are thousands of residential homes currently tied up awaiting planning decisions and thousands more being challenged by way of Judicial Review.
We are hopeful the resources being put in place will ensure that many thousands of units currently held up will be commenced and delivered.
In addition, most of our Local Authorities have adopted new County Development Plans. The IHBA believe many of these plans have been based on incorrect population data – hence the amount of land required to house our population today and into the future will be problematic.
The Department of Housing is currently reviewing the National Planning Framework. This is a critical piece of work in determining the future housing needs. The review needs to be prioritised and concluded urgently.
What areas of policy and planning reform show the most encouraging signs of beneficial change?
The new Planning and Development Bill is currently being reviewed by the IHBA. We welcome a lot of the general principles but we are assessing this large bill, it is over 700 pages long. The IHBA will be making a detailed submission to the Oireachtas Housing Committee and the Department of Housing.
In relation to Compact Growth, the guidelines are due to published shortly and these will hopefully allow for more ways of achieving high density housing allowing for more own-door units.
What role does MMC play in the delivery of housing in Ireland?
MMC must play a very significant role in assisting with residential delivery in Ireland. Thankfully, in the past year the Mount Lucas National Construction Training Centre was launched. I am hopeful this significant investment will help to drive awareness, technical knowledge, and increase capacity in our sector towards the use of MMC.
Our industry is very dependent on the trades people and operatives delivering on site. We are simply not getting the numbers of apprentices needed into the sector. Therefore like all manufacturing businesses, we need to embrace new ways of constructing and producing our new homes.
I believe the sector is very forward-thinking and is moving in that direction. What is key to delivering large residential developments using MMC is the need to try and standardise our product.
For this to work effectively it has to be done at scale. We really need to look at our design standards in tandem with this and come up with a model that works at all sides. To get there it will require buy-in from all stakeholders from initial concept through planning, right up to construction on site.
Housing For All calls for a new MMC approach to housing delivery. It’s asking the industry to maximise its use of modern technologies. The homebuilding community are very supportive of this initiative.
What is the most urgent change IHBA members need to see from government?
There are a number of key issues that we would like the Government to take action on. First of all we would like the NPF review to conclude.
We know our population is now heading to circa 5.25million people. We need to stop underestimating this number. We need to stop underestimating inward migration. Otherwise we are going to have the same problem into perpetuity.
Therefore we need our Local Authorities (LAs) to re-examine land zoning in the very near future. The IHBA recently engaged KPMG to review two Local Authorities Housing Need Demand Assessments and the report concluded that both LAs have once again underestimated their population growth and housing need. We need to change this quickly.
we need to make planning decisions in reasonable time frames. I have heard stories of planning permissions in ABP for two years and still awaiting decisions. This is a crazy situation in the context of a housing crisis.
Resourcing the Board and the Local Authorities with more planners is key. We also need to look at seconding professional planners from some Local Authorities to others.
The sector is very forward-thinking. What is key to delivering large residential developments using MMC is the need to try and standardise our product at scale.
What other challenges does the industry face?
Climate change is a huge challenge. Our industry has a very high carbon footprint and we have really difficult targets to achieve. Our environmental obligations and sustainability are here to stay. Our industry will have to embrace these changes.
Terminology like EU Taxonomy is going to be part of all our conversations going forward and our industry is preparing for these necessary changes.
Another significant challenge is attracting talent to our industry, the CIF is committed to working with the Department of Education to ensure young people are more aware of what the industry has to offer. There is a long term need for so many workers to deliver the needs of our society.
Our Association and members need to help deliver this message to young people starting out in life. We need to convince them that working in construction can be a very rewarding career.
What does the IHBA need to address in the future?
The IHBA is our national representative body. I’ve been involved with the National Committee of the IHBA for a long time and it’s a very male-dominated association. Looking ahead I feel that we need to encourage diversity. Thankfully we have started the process and have a very balanced executive team.
We need to ask more women working in our sector to become involved in our National Committee and also our sub-committees and working groups to help formulate policy solutions and strategies for housing over the coming decades.
We also need to address the public perception of developers and homebuilders. I do feel we always seem to be at the wrong end of media discussion. This will take some time to change.
Developers and homebuilders are blamed far too often for all of our housing problems, when there are plenty of obstacles that have been put in the way of housing delivery. The IHBA will keep trying to improve this, noting how difficult this business can be and how long it takes to get from initial design to handing over a set of keys to a happy new home owner.
You are coming to the end of a two-year leadership stint as IHBA chair, Share some thoughts on your tenure?
It is very hard to gauge how much progress has been made over a two-year tenure in housing as changes to housing policy can take a long time. Then ultimately, to see how effective the policy measures are can take a number of years to have a real impact.
However we have had really good engagement with the Department of Housing and our Minster Darragh O’Brien, who are fully-aligned with our desire to increase housing output.
Over the past few years we have navigated Covid-19. We lobbied strongly for the extension of the Help to Buy scheme and also for the First Home Scheme. We have made numerous submissions on policies and development plans, and I am hopeful that we have helped policy makers in terms of advancing the delivery of homes.
During the past two years we have increased housing output by circa 45 per cent, in the face of disruptions caused by the pandemic.
Thankfully our Vice Chairman and incoming Chair Michael Kelleher, who has been a great help to me over the past few years, will give our Association the leadership and continuity needed in making sure that government is well informed by our industry – both on the positive or negative impact of their decisions on housing delivery.
During my tenure we have also built up a superb IHBA executive team – Áine McGinity, Rosie James, Cathy Gurry and Conor O’Connell, our Director of Housing, Planning and Development. I want to thank them for all the help and support they have provided to our membership over the past two years.
We have great people in our Association who are passionate about what we do. This is probably the most important development over the past two years.