Planning permissions are not a perfect guide to future building activity. Some are sought just to add value to the site while many building projects founder for financial reasons. That said, the latest planning data from the Central Statistics Office captures two strong trends in the residential market here: the pick-up in building generally and the industry's preference for apartments.
The figures indicate planning permissions were granted for 42,991 homes in 2021, up from 42,371 in 2020. The Central Bank is forecasting that about 25,000 new housing units will be built this year, followed by 30,000 and 35,000 units in 2023 and 2024 respectively.
The second trend is the acceleration in apartment builds, which now eclipses house builds. Of the 42,371 permissions granted last year, 26,272 were for apartments, a shade over 62 per cent. Nearly 19,000 were earmarked for Dublin, where foreign investors have flooded into the capital’s private rented sector market to avail of comparatively strong returns.
Big funds
This has proved controversial with critics who claim the big funds are driving up prices while providing unsuitable accommodation for young families. Dublin City Council is trying to limit build-to-rent apartments.
However, a report by property consultants Mitchell McDermott earlier this week warned that Dublin planners’ efforts to limit build-to-rent apartment blocks threaten supply, as costs mean building them to sell is not viable.
The report also captured perhaps the other big trend in the sector: inflation.
It warned that the price of materials including steel, timber, windows and bathroom fittings rose between 20 per cent and 86 per cent last year. This level of price growth poses a risk to many of these projects and to the prospect of the industry building to rates that approximate demand in the market, notionally put at 35,000 units annually. It’s not obvious that inflation, which is being fuelled by energy prices, will moderate any time soon.
