Opposition to New Apartment Guidelines Highlights Confusion Between Viability and Affordability

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Even though we knew they were coming, the publication of new guidelines on the design of apartments in Ireland caused quite a stir earlier this week.

The backlash from some quarters has been negative and I understand this.  Of course making unit sizes smaller sounds like a retrograde step and rowing back on the standards introduced two years ago was never going to sit well with people; however, it is important to put these changes into context.  Let me start by clarifying that there is absolutely no lessening of building quality or safety standards.

One of the most controversial new guidelines is the reduction of the minimum size of apartments from 40 sqm to 37 sqm.  This appears to be following a global trend towards smaller homes, which can be a good thing in areas of high demand when complemented by smart design. Again, in keeping with international trends towards reliance on public transport, car parking spaces may now be eliminated from urban developments within 1km of Dart/Luas or rail.  Also, increasing the number of apartments that can be built on each floor, and per elevator, might actually make a previously-unviable development viable.

There is a definite sense of frustration, particularly in Dublin, about the lack of home building going on.  Many people believe this is because of developers hoarding land, waiting for prices to rise and, while this might well be true for some, for most home builders, the high cost of development land, together with escalating construction and financing costs in recent years, means that it is simply not possible to build the type of housing that planning permissions require, for a price that the market can pay.  The developments that are currently ongoing tend to be aimed at the higher end of the market when completed, well above the average house price within the capital and above what most mortgaged homebuyers can afford.  This is not sustainable in the long term and it will not be enough to deliver on the housing commitments made by Government officials in their Rebuilding Ireland initiative.

This is merely an extension of an issue that I have highlighted in the past (see: Housing in #RealNumbers on Newstalk FM), namely, there is a difference between viability and affordability.  A residential development project is deemed viable when the individual homes within can be delivered all-in, including margin, for a price that the market will accept and pay.  This has little to do with consumer affordability.  Most of the apartment development projects ongoing in the current market are viable because they are outside the affordability range, which, according to Housing Department figures is somewhere between €260,000 – €320,000.

Making apartment developments viable will undoubtedly encourage development, however, there is still a huge amount of work to do in order to achieve levels of affordability in parts of the country.

One of my own concerns with these new guidelines is that the name itself is slightly misleading; these are mandatory instructions for local authorities, who must adhere to them when drawing up their local area plans and deciding upon local planning applications.  Without the need for mixed unit sizes, there may well be some long-term, unintended consequences arising from having a raft of one-bed units in smaller towns around the country.  It would certainly be interesting to get some regional perspective on this.

Are these guidelines perfect? No.  Do we need them? Absolutely.

If we do not accept these changes, we are effectively declaring that our capital city and other urban areas are only for above-average income earners.  Everyone else must commute into work and  then leave at the end of the day.  This would essentially dismantle communities in the city, making the area completely lacking in vibrancy after 6pm. This is not sustainable.  A big part of successful home-building is about community building and this must start by recognising and responding to the different needs of people at various stages of their lives.

 

To discuss this and other housing matters in Dublin, please contact me directly on +353 (0) 87 937 0896, Derek@VictoriaHomes.ie  or check out all of our current developments at www.victoriahomes.ie/

 

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