INDEPENDENT INQUIRY NEEDED TO RESTORE

FAITH IN PLANNING SYSTEM AND HOUSING MARKET – NIRSA 

POOR PLANNING A MAJOR FACTOR IN

DOWNFALL OF CELTIC TIGER   

NAMA SUCCESS FAR FROM CERTAIN

NIRSA (National Institute for Regional and Spatial Analysis) at NUI Maynooth today called for the creation of an independent inquiry into the “catastrophic failure” of the planning system, which contributed towards the property bubble and financial crisis.  NIRSA said that like the Honohan and Regling & Watson reports on financial and banking regulation, an inquiry must be conducted into the formulation and implementation of planning policy, the over-zoning of land and granting of planning permission, and property tax incentives.  NIRSA pointed out that Government has two levers to control building development - fiscal policy and the planning system, and they failed on both fronts.

Director of NIRSA, Professor Rob Kitchin says that a litany of systemic failures on the part of the Government and local authorities led to the over-development and the rezoning of land which was surplus to requirement, will take years to correct, and could seriously hamper both the recovery of the housing market and the operation of NAMA. “The banks could have lent all they wanted” Prof Rob Kitchin explained “but if zoning and planning permission was not granted, property construction could not have gone ahead.”

“An independent inquiry is needed to investigate all aspects of the planning system and its operation within and across different agencies and at all scales in Ireland including charges of localism, cronyism and clientelism.  The creation of an inquiry will allow Ireland to learn from the mistakes of the past and help place the property market back on the road to recovery”, he said.

In a comprehensive report, the NIRSA team found:

• Reckless planning has led to a dramatic oversupply of housing, leaving one in six houses in the Republic of Ireland uninhabited for the majority of the year.  Four reports this year, by NIRSA, UCD, Goodbody and DKM/Department of Environment, all concur that vacancy including holidays homes is over 300,000 units, that vacancy excluding holiday homes is over 228,000 and, even assuming a generous base vacancy rate of 6-7% of all houses, the potential oversupply is 103,000 units.

 

• This problem is particularly evident in the 620 or more ghost estates that litter the country.  Ghost estates are developments of 10 units or more, where over 50% are empty or unfinished.

 

• Vacancy rates throughout Ireland actually increased throughout the Celtic Tiger era, yet a developer friendly regime provided few checks and balances to this situation.   Between January 1996 and December 2005, 553,267 housing units were built.  In the same period, the number of households grew by only 346,400.  From 2006 to 2009 an additional 244,590 units were built. 

• Tax incentive schemes greatly exacerbated the situation.  The counties that had the most vacant stock in 2006 subsequently built the most new housing in the following four years, now have the highest levels of oversupply, and have the most land zoned for future use.  The most problematic of these counties are part of the Upper Shannon Rural Renewal Scheme. 

• Collectively, Cavan, Longford, Leitrim, Roscommon and Sligo increased their housing stock by 49.8% between 2002 and 2009, from 90,491 to 135,544 units.  In April 2006 19% of dwellings were vacant (excluding holiday homes), amounting to 21,816 units, and yet between April 2006 and 2009 an additional 20,414 units were built, more than the increase in households in the previous ten years (18,896). 

• These counties have land zoned for an additional 50,758 houses, enough to last 27 years if the number of households continues to grow at the same rate as 1996-2006, which it is currently not.

• Nationally, there is enough excess housing and zoned land to last an average of 16.8 years, assuming the number of households continues to grow at the 1996-2006 rate.  However Cork City (64 years), Monaghan (59 years), Dun Laoghaire Rathdown (47 years) and Roscommon (45 years) are far in excess of this.

NIRSA reports that the degree to which supply and demand were kept comparable varied significantly between local authorities.  While several local authorities abjectly failed to manage development, Fingal, Kildare, Galway City, Meath, Wicklow and South Dublin were relatively prudent in the Celtic Tiger years and have low levels of oversupply.

NIRSA argues that a number of local authorities have essentially ignored good planning guidelines, regional and national objectives, sensible demographic profiling of potential demand and the fact that much of the land zoned lacks essential services. Instead, planning has been driven by the demands of developers and speculators, and ambitious, localised growth plans.  Further, central government not only failed to adequately oversee, regulate and direct local planning, but actively encouraged its excesses through tax incentives and by disregarding its own principles as set out in the National Spatial Strategy through policies such as decentralisation.

NIRSA argues that seven key issues need to be addressed before consumers will regain confidence in property, house prices bottom out, and the housing market starts to function properly:

1. Supply and demand will need to be harmonised.
2. There has to be a sustained growth in the economy with an associated fall in unemployment.
3. House prices have to align more closely to average industrial earnings. 
4. Affordable credit has to be available for first time buyers and those trading up.
5. The uncertainties concerning NAMA and its operation have to dispelled, especially since it will be controlling a sizable share of property and land.  This necessitates full transparency of the agency’s workings and the assets it is managing. 
6. Consumers have to be satisfied that the banking crisis is truly over and that financial institutions are properly regulated. 
7. Substantive changes need to occur in the planning system. 

In addition, we need a clear plan of action to deal with ghost estates.  This should include addressing social and economic conditions of those living on such estates and a full assessment of alternative uses. 

While NIRSA said an independent report into the last 15 years was a vital component in restoring confidence to the system, so too is there a need for confidence and transparency in the government’s response to the crisis – the operation of NAMA.

“There is a growing sense that NAMA is paying too much for the loans it is acquiring and this is being borne out by its consistently falling projections of its own financial performance.  For observers, there is a worrying lack of transparency about the nature or location of loans it is taking on.  While NAMA does not have time to wait for land to be dezoned before determining its value, it should only be paying agricultural value for much of this land.” said Professor Kitchin.

“The truth is - based on current modus operandi - we will not know whether it might succeed or fail until much further down the line. That may be too late. For NAMA to succeed, the property market has to strengthen, but that is unlikely to happen unless people are confident about NAMA and its portfolio.  At the moment, there are legitimate questions to be asked about NAMA’s potential”, he added.

 

“A Haunted Landscape: Housing and Ghost Estates in Post-Celtic Tiger Ireland” is published by Rob Kitchin, Justin Gleeson and Cian O’Callaghan of the National Institute for Regional and Spatial Analysis at NUI Maynooth, and Karen Keaveney of the School of Spatial Planning, Architecture and Civil Engineering, Queens University, Belfast.

 

The full report is available from /www.nuim.ie/nirsa/research/documents/WP59-A-Haunted-Landscape.pdf   

 

Ends                                                                                                                     29th July 2010