Tinkering with Standards May Have Held Back Apartment Construction over Past 3 Years

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By Chamber Press Office, 18 February 2018

Dublin Chamber Economist Mark Canavan outlines the main findings of new research by the Chamber into how Government policy changes are impacting on apartment construction:

In an effort to make apartment development more viable, the Government has introduced a series of reforms to apartment standards and planning over the past 3 years designed to kick-start development.
An analysis of a unique dataset consisting of planning applications for new apartments in the Dublin Region by Dublin Chamber suggests these reforms may have had a dampening impact on the supply of new apartments.
The high frequency of changes to standards has created uncertainty for investors, developers and builders, delaying new planning applications for apartment building in Dublin.
The analysis suggests that substantial policy changes made over the last three years to encourage more apartment development have not had the desired effect. In fact changes to apartment standards have coincided with distinct periods of decline in new applications in Dublin for apartment construction.
For instance, in the 12 months prior to a reduction in minimum apartment size regulations on 6th December 2015 6 new planning applications were being made for apartment developments every two weeks. However in the 12 months after this change there was a 40% reduction in the number of applications, with just 3.5 applications every two weeks from Jan-Dec 2016. The number of applications during 2017 (from Jan-Oct 2017) picked up somewhat, with 4.2 new applications being made every two weeks, but still well below 2014/2015 levels
The fact that new planning applications for apartments were so stunted in 2017 suggests that developers are holding back to see what changes are made to apartment standards before designing their projects and seeking finance. There was also a number of planning applications withdrawn after the announcement by the Minister of his intention to change apartment standards in October 2017
Overall there has been a substantial decline in new applications for apartments in 2016 and 2017, which suggests that we can expect fewer apartments to be built in the short-term.
We believe that the new standards proposed by Minister Murphy in October on increasing height and reducing car parking requirements are necessary to enhance viability of apartment development in the City. However the implications of our analysis is that these must be introduced without delay, as these appear to be holding back new planning applications for apartment construction.
Furthermore, after these changes are made the gate must be closed to further tinkering. The market must be given assurance that no new changes in apartment standards will be introduced for the foreseeable future.
Any further policy changes should only be made very gingerly and without advanced signalling. They should be considered only with the full costs of uncertainty and time delays built into any Regulatory Impact Assessments and cost benefit accounting.
Dublin Chamber's full analysis can be found here: https://www.scribd.com/document/371847395/Dublin-Chamber-Apartment-Construction-in-Dublin-What-Impact-Have-Policy-Changes-Made