'Undercapitalised' developers struggle to scale up house building, TDs to hear
Developers have struggled to scale up housebuilding due to many being 'undercapitalised' since the financial crisis, the Housing Agency will tell TDs today, Tuesday.
The Oireachtas housing committee is due to host the Housing Agency and the Land Development Agency during its meeting on Tuesday afternoon, with both due to highlight challenges to housebuilding.
In his opening statement, Housing Agency CEO Martin Whelan will tell TDs that ongoing capacity constraints within the construction sector are 'significant barriers to delivery'.
These constraints include a shortage of zoned, serviced land as well as the current structure of the Irish development and construction sector, Mr Whelan will say.
'On the private side, few housebuilders outside the largest and institutionally-backed entities have a good pipeline of ready-to-go sites, and even when they acquire land that is zoned and with planning, infrastructure shortcomings and blockages can impede delivery,' Mr Whelan will tell the committee.
'Undercapitalised since financial crisis'
On the capacity of the construction sector, Mr Whelan is due to say that most developers have 'remained undercapitalised since the financial crisis'.
'This significantly limits their ability to scale up development activity, with many operating on a project-by-project basis rather than on a programme of concurrent development projects,' Mr Whelan will say.
'On the construction side, where we appear to be at, or close to, full capacity, the challenge is one of productivity — how can the industry do more with existing resources?'
In particular, Mr Whelan will cite the need to further adopt the use of modern methods of construction.
The Housing Agency chief is also due to call for an increase in the number of staff in local authorities and approved housing bodies to deal with the rise in the number of social homes.
This is to support 'good estate management and tenant services', Mr Whelan will say.
CEO John Coleman is expected to tell the Oireachtas housing committee about challenges facing the Land Development Agency, including a lack of zoned, serviced land, the cost of delivering apartments, and legal challenges to planning permissions. Picture: Mike Shaughnessy
He will tell TDs the Housing Agency has been working with an 'industry consortium' to develop a social and affordable housing apprenticeship, which aims to address the skill shortage in the area.
It is expected apprentices will begin enrolling next year, he will add.
On capital investments, Mr Whelan will tell TDs and senators that to reach 50,000 houses a year, there will need to be approximately €20.4bn worth of finance allocated to housing, of which €8.2bn must be equity.
More apartments needed
In particular, he will say this requires more apartments to be built, which require more equity to be provided.
He will cite research from the Central Bank, which says equity finance fell from an average of €2.5bn in 2021 and 2022, compared with €450m in 2023 and 2024.
'The availability of this type of equity financing is particularly important for meeting supply targets for residential development over the medium term,' he will say.
The CEO of the Land Development Agency (LDA), John Coleman, is expected to tell the committee there are a number of challenges facing the agency, including a lack of availability of zoned, serviced land, the cost of delivering apartments, and legal challenges to planning permissions.
He will also highlight 'a lack of investment in the rental sector', as well as viability challenges to unlocking brownfield sites for development due to remediations costs associated.
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