Deloitte threw a hand grenade into Government Buildings this week. Even if the Government was busy with public sector pay negotiations, the consulting firm’s latest Crane Survey report can’t have gone unnoticed.
It forecast that the Government would miss its 2030 housing delivery target and not by a small margin, by a country mile.
The Coalition has staked its political reputation on delivering 300,000 new homes by the end of 2030.
Deloitte’s report predicts it would fall short by between 123,400 and 136,100 homes, largely because planning permissions are “not keeping pace”.
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The problem, according to Deloitte, is that a significant number of planning permissions lapse or expire before construction commences.
Although there is time between now and 2030 for more units to be granted planning permission, the increasing time lag between planning permission and construction was also highlighted as a problem.
While 182,130 homes have been granted planning permission over the last five years, historical Central Bank data indicate that 25-32 per cent of planning permissions never commenced.
Applying the same lapse ratio to the current stock of permissions in the system suggests the Government will be short by between 123,400 and 136,100 homes by the end of 2030.
“Even though our Crane Survey estimates that completions are on course to reach their highest volume since 2008 [40,000 this year], the planning permission pipeline is less promising,” Deloitte Ireland’s chief economist Kate English said.
If Deloitte’s forecast materialises, the heat on the Government coming into the next election could be considerable.
The group’s report comes in the wake of comments by Cairn Homes boss Michael Stanley, who claimed Ireland had “little chance” of scaling up annual home completions to 60,000 – the target level – unless half of all units built are apartments, which developers face significant challenges delivering because of cost and planning logjams.
Government parties managed to convince many voters at the last election that while housing remained a core challenge, supply and construction were moving in the right direction.
It’s not obvious that’s the case any more.
