You may recall how yesterday new figures from the Central Statistics Office (CSO) showed the national average house price rising by almost 11% in the year to February.
Some economists have blamed the Government’s Help To Buy scheme for fuelling the sharp rise in prices.
Further to this…
Architect Maoilíosa Reynolds wrote an article for the Sunday Business Post in which he raised serious concerns about the Department of Housing’s seemingly disingenuous methodology when it comes to calculating house building figures.
He explained that official house completion figures are based on connections to the ESB network. To this end, the department says 14,932 new homes were “delivered” in 2016.
But, he said:
“There are significant problems with this. When a dwelling has been vacant for two years or more, the ESB network requires the owner to apply for a new connection (MPRN). This is a safety measure designed to make sure vacant units are safe and wired correctly. Using this method, existing completed Nama vacant units, part-completed ‘ghost estate’ units and local authority refurbished voids, when re-connected to the grid, are all classified as new completions. In the five-year census period, almost 20,000 existing houses have been re-connected and therefore officially reclassified as new builds.”
Mr Reynolds also raised concerns about how commencement figures are calculated – and crucially inflated – for large housing estates.
“In larger, estate-type projects, the established practice is to lodge one commencement notice for an entire scheme which may not be completed for several years. A 400-unit estate which begins building today may only deliver 50 units in 2017 – but all 400 will be counted as commenced this year. As a result, estate commencement numbers are inflated.”
As for residential planning permissions, he wrote:
“Up to 40 per cent of residential permissions do not get built for various reasons – lack of finance, ‘value-add’ exercises or extensions to existing permissions.”
Bizarrely, Mr Reynolds explains that one metric can be trusted and that’s the Department of Housing’s own detailed database called the Building Control Management System (BCMS).
“A presentation by Department of Housing representatives to Engineers Ireland last month disclosed BCMS completion figures – not published on the Department’s website – for 2016. According to the presentation, there were just 3,505 certificates of compliance issued for all building types (not just residential).
In some instances, a single certificate of compliance covers more than one unit, so it is thought that the true number of homes represented by completion certificates could be as much as 30 per cent higher. But the reality is we don’t know.
Assuming the 30 per cent figure is correct, this means that certificates of compliance may represent 4,556 units delivered, a figure that includes 243 local authority and 400 units for conversions of existing non-residential to residential (Department’s own estimate). Add in average figures for one-off housing commencements at 2,972, a maximum delivery number of 7,528 is reached, or just 50.4 per cent of the official figure of 14,932.
This is best-case scenario. The number is likely lower, as BCMS tracks all building types, but does not disaggregate residential from other activity.
This means that in 2016, new-build output was half the official figures and a minimum of 7,404 existing vacant, refurbished voids and ‘ghost estate’ units reconnected to the grid were double-counted as new completions.”
Further to this.
Keelin Shanley was speaking to the Minister for Housing Simon Coveney on RTÉ’s News At One this afternoon when she raised the matter of Ireland’s official housing figures.
Keelin Shanley: “If you want to solve a problem, the very first thing you have to do is quantify that problem and know exactly what you’re dealing with. There has been discrepancy over figures that are coming out. We see 4,400 new home transactions over the last 12 months, comparing to a figure of 15,000 coming from the department. Can you explain the difference here? Because a number of experts have tried.”
Simon Coveney: “No, look, we measure new house completions that same way now as we have done every year since the 1970s. It’s based on ESB connections so , in other words, when somebody comes into a house, they put in place an ESB connection to actually insure that that house has been lived in, that is what determines new completions. Last year, it was over 15,000. The year before just over 12,000. This year the anticipated figure will be about 19,000. And so…”
Shanley: “So, ESB connections, rather than new homes put in place. These can be homes being brought back in or…”
Coveney: “I can only, like, you know, I mean, if we, you know, if figures were showing a different result, you’d ask me a different question. All I can do is use the same methodology that we’ve always used. To measure new completions, so that we can see improving trends. And we are seeing a dramatic increase in house building activity in Ireland, mainly around the cities. It’s only starting in other…if you look at Co Galway, one of the biggest counties in the country, only one housing estate built in the last six years. If you look at a county like Tipperary, not a single housing estate built in the last five or six years. And we’re about to have 200 houses built outside Clonmel. So we are seeing increases. It is ramping up quickly but it will take time for that to turn into new homes, good quality communities and housing estates and significant [inaudible] needed in city centres.”
Talk over each other
Coveney: “Planning applications, for example in Dublin, for apartment complexes is up more than 200%. So the willingness is there. But look, we can’t…”
Shanley: “There is a lag..”
Coveney: “…ignore the fact that, but over the last six or seven years, we had a broken economy and at the heart of that was a broken construction sector we had a banking sector that didn’t function, many, many developers and builders went out of business. 200,000 people lost jobs on building sites. In the last 12 months there’s an extra 13,000 people working on building sites so we are rebuilding literally from a very, very low base. It is going to take some time to deliver a response on that, but it’s happening.”
Shanley: “Minister, nobody disputes that, we’ve seen it. And that’s fair enough. I think everybody accepts that there is a lag. But even so, over the last 12 months, that figure of 4,400 new home transactions or 15,000 completions from the department, it’s still a very long way off from what’s actually needed and that’s with time. You know, they’re the most recent figures….”
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