18/6/15: Tripling Permissions... and Where's That Construction Boom?

CSO released Planning Permissions figures for Q1 2015 with the following summary:

Which certainly conveys a sense of a veritable boom going on in the construction sector future activity pipeline. Yes, tripling of the apartments permissions and doubling of total dwelling permissions.

But here are the numbers in their more sober presentation. Please, mind - these are numbers from CSO itself.

• Total number of planning permissions granted in Ireland in 1Q 2015 stood at 3,895. which is 11.2% higher than in 4Q 2014, but only up 1.62% y/y. In 1Q 2014, the same rose 17.04% which is much faster than in 1Q 2015. So the boom is getting less boomier.
• Current level of planning permissions granted is 77.5% lower than at the peak while at absolute minimum of the crisis it was 81.1% lower. In other words, we are not that far from the crisis trough.
• Current level of planning permissions granted is 10.27% below the absolute minimum achieved in 1975-1999 period.
• The record busting quarter of 1Q 2015 is actually 13.76% below the quarterly average between 1Q 2011 and today.
• Dwellings saw planning permissions granted rise to 1,065 in 1Q 2015 which is 21.3% ahead of 4Q 2014 (remember - seasonal variation not accounted for). 1Q 2015 number is 19.5% ahead of 1Q 2014, so there is nice growth here y/y.
• Still, 1Q 2015 reading for dwellings permissions granted was 85.9% lower than pre-crisis peak, 26.9% lower than 1975-1999 period lowest recorded number and is 35.4% lower than the quarterly average for the period from 1Q 2011 through 1Q 2015.
• In Sq. Footage terms: total volume of planning permissions granted in 1Q 2015 came in at 952,000 sq.m. which is 28% ahead of 1Q 2014, but 85.8% below pre-crisis peak. Things are getting healthier here, but still off very low levels.

You can judge the trends for yourself in the following charts:

Boom here?

Or boom here?

Or maybe a boom here?

Ah, at last, a boom here?

Oh dear... gotta be next time...

21/12/2014: Planning Permissions Q3 2014: Being Un-dead ≠ Being Alive

This week, there were some champagne-popping media headlines about planning permissions print for Q3 2014 released by the CSO. So what's the hype was about, folks?

Starting from the top, total number of new planning permissions granted in Q3 2014 stood at 4,238. This represents a rise of 9.37% y/y and follows a decline of 4.25% y/y in Q2 2014. Sounds pretty solid, except when you look at the levels of activity involved. Which is so abysmally low, that a 9.37% rise is hardly an uptick worth boasting about.

Take a look at the chart:

Firstly, the uptick is still within the range of activity between H2 2011 and present. Secondly, current level of activity is still below any quarter on record between Q1 1975 and Q3 2011. In summary, then, current print is worse than any quarter of the dreaded 1980s recession. And activity is still down 75.6% on pre-crisis peak. It is 29.4% above the current crisis trough, but Q3 2014 number of planning permissions is still 2.37% below the lowest point between Q1 1975 and Q3 2011.

Total area covered by planning permissions in Q3 2014 was up 18.35% y/y having posted a decline of 6.16% in Q2 2014. This sound great. But, again, levels of activity are too low to interpret these increases as much more than 'bouncing at the bottom'. Outside the current crisis, you'd have to go back to Q1 1989 to find comparable level of activity as measured by the square meters permitted.

Worse, as the chart above shows, there is no life in the house-building sector. Area covered by new permissions when it comes to Dwellings is basically flat at the bottom of what already constitutes extremely poor activity. Q3 2014 still reads less than any other quarter from mid 1988 through Q4 2011.

In line with the above, number of new planning permissions for dwellings is itself trending in a narrow range at the bottom of historical records chart:

What is truly amazing is that seven (!) years after the start of the crisis and with property prices surging, there is absolutely no signs of life in the construction sector, when it comes to new planning permissions. None. Nada. And yet, Irish media is going off the rails spinning the small percentage increases as signs of upcoming 'boom'.

25/9/2014: Irish Planning Permissions Q2 2014: No Signs of Sustained Recovery, Yet...

CSO released planning permissions data for Q2 2014 (release here), so here are updated charts:

Starting from Total Number of Planning Permissions Granted: this rose in Q2 2014 to 4,149 which is up 8.24% q/q. In Q1 2014, total number of PPs granted was up massive 13.3% y/y down to anticipated changes in regulations. Year on year, Q2 2014 numbers were up 23.19% - which is significant. Alas, increases took place off a very shallow level of activity, with Q2 numbers down 76.1% on pre-crisis peak and down 4.42% on 1975-1999 minimum (lowest point in activity for that period). So current level of PPs is still lower than in any quarter between Q1 1975 and Q4 2010. On the somewhat positive side, current level is the highest since Q3 2011.

Still, as chart above shows, the post Q1 2012 trend remains flat (aka, there is no sustained recovery, yet).

Planning permissions granted for dwellings are showing even worse performance. These were up 18.64 q/q in Q1 2014 and are now down 1.8% in Q2 2014. However, y/y PPs for Dwellings are up 13.34%. The wild volatility ride continues in the series and the trend is still flat, showing no real recovery. Compared to pre-crisis peak, current activity is down 88.4% and relative to 1975-1999 minimum level of activity, Q2 2014 figures stand at the levels 40% lower than the worst point recorded in 1975-1999. This quarter marks the fifth worst quarter on record.

Chart above shows clearly that the trend has been flat since roughly Q1 2013.

Floor area underlying granted PPs is tanking, again, as illustrated in the chart below:

And with it, the average floor area per granted permission:

So here is the summary of H1 cumulative figures for 2014, compared to 2011-2012:

• Planning Permission granted for all types of construction rose to 7,982 in H1 2014 from 6,643 in H1 2013 and 7,040 in H1 2012. But total floor area underlying these permissions fell from 1,558, 000 sq.m. in H1 2011 and 1,764,000 sq.m. in H1 2013 to 1,456,000 sq.m. in H1 2014.
• Planning Permissions for Dwellings stood at 1,766 in H1 2014, up on 1,634 in H1 2013, but down on 1,899 in H1 2012. Total floor area associated with PPs for Dwellings stood at 563,000 sq.m. in H1 2012, rising to 727,000 sq.m. in H1 2013 and falling to 632,000 sq.m. in H1 2014.

In other words, I am failing to see any sustained upward momentum in future work pipelines for the construction sector. Backlog of past permissions might be working through the latest optimistic outlooks for the construction sector, but as far as genuine new activity goes, we are not there yet.

24/4/2014: Where's that Fabled Property Boom in Ireland?..

Throughout 2013 and indeed starting from as far back as mid-2011, there has been a never-ending stream of 'good news' stories from the property markets. Many are real. Many are unverifiable. Some a complete nonsense.

Here is one forward-looking indicator for the health of the property market: planning permissions granted. And courtesy of CSO we can now update Q4 2013 data and thus compute full year 2013 results.

Here they are:

1. Planning permissions granted for All Types of Construction fell 3.5% y/y in 2013 to an absolute historical minimum of 13,901 (data from 1992). Between 2011 and 2013 total number of planning permissions is down 13.1%. Compared to peak, these are now down 77.7%. There is no turnaround in sight judging by these numbers. In fact, 2013 was 6th consecutive year of y/y declines.
2. Planning permissions granted for dwelling fell even more steeply: down 9% y/y in 2013 and down 23.6% since 2011. These too are now at historical low and in decline for seven years in a row. There is no turnaround here either.
3. Other new construction (ex-dwellings) planning permissions posted a rise of 0.7% y/y in 2013 and are up 14.9% on 2011 levels. However, at 3,431 total, these are 4th lowest in history and below the levels recorded in any year between 1992 and 2009. Relative to peak these are down 82%, so steep increase since 2011 was (a) exhausted in 2013 (given weak 0.7% rise) and (b) appears to be based on sheer magnitude of the permissions collapse at the height of the crisis. Still, we might call this some evidence of something that might signal a turnaround.
4. Planning permissions granted for extensions fell 3.6% y/y in 2013 and are down 12% on 2011 levels. These series hit absolute historical low in 2013 and mark 6 consecutive years of declines. 
5. Planning permissions granted for alteration, conversion and renovation purposes rose 0.8% y/y in 2013, with series down 6.6% on 2011 levels. 2013 was the second lowest year on record. Again, this evidence is not consistent with a turnaround.

Two charts to illustrate:

In terms of floor area approved:

1. 2013 saw increases of 4.4% y/y for all types of planning permissions granted. However, the increase was from the levels that were so low that even with 4.4% rise in 2013, 2013 levels are still 21.6% below those in 2011. 
2. 2013 was the second lowest year on record for planning permissions (by floor area) granted for All Types of Properties, for dwellings, for other properties ex-dwellings.
3. 2013 was the worst year on record for planning permissions granted on the basis of floor area for extensions.

Key takeaway: Planning permissions granted data shows no signs of a turnaround in building & construction sector in Ireland in 2013 and no signal of such turnaround in early 2014 either.

25/9/2013: Planning Permissions, Ireland, Q2 2013 and H1 2013

Q2 data for Planning Permissions Granted in Ireland is out today and on the surface it offers some good news reading.

Per CSO: In the second quarter of 2013, planning permissions were granted for 1,926 dwelling units, compared with 1,406 units for the same period in 2012, an increase of 37.0%.

In addition:

• Planning Permissions were granted for 1,496 houses in the Q2 2013 an increase of 28.3% y/y.
• Planning permissions were granted for 430 apartment units, an increase of 79.2% y/y. 
• The total number of planning permissions granted for all developments was 3,368. This compares with 3,672 in the second quarter of 2012, a decrease of 8.3% y/y. 
• Total floor area planned was 834 thousand square metres in the second quarter of 2013. Of this, 39.9% was for new dwellings, 39.7% for other new constructions and 20.4% for extensions. The total floor area planned increased by 1.2% in comparison with the same quarter in 2012. 

Some encouraging signs up there… although if you think the crisis is over, here's a handy chart from CSO:

The above, as CSO notes, puts things into perspective: we are starting from exceptionally low levels, so even a small uptick translates into large percentage changes. Still, I am happy to spot an improvement.

Now, let's take a closer look. I am dealing from here on with permissions issued, not units covered by these permissions.

• Total number of planning permissions was down at 3,368 in Q2 2013, a decline of 8.28% y/y. In Q1 2013 there was a decline of 2.76% y/y, so rate of decline increased from the beginning of the year.
• Total number of planning permissions in H1 2013 stood at 6,643 - down 5.64% y/y.
• Total number of new permissions for dwellings granted in Q2 2013 was 772, which is down 18.05% y/y, which compares to 9.93% drop recorded in Q1 2013.
• Total number of planning permissions for dwellings in H1 2013 stood at 1,634 - down massive 13.95% y/y.
• Total number of new permissions for other new construction (ex-dwellings) granted in Q2 2013 was 754, which is down 8.94% y/y, which compares to a rise of 12.95% recorded in Q1 2013.
• Total number of planning permissions for other new construction (ex-dwellings) in H1 2013 stood at 1,539 - up barely noticeable 1.05% y/y. At least these series were up.
• Total number of permissions for extensions granted in Q2 2013 was 1,489, which is down 3.87% y/y, which compares to a decline of 3.21% recorded in Q1 2013.
• Total number of planning permissions for extensions in H1 2013 stood at 2,785 - down 3.57% y/y.
• Total number of permissions for alterations, conversions and renovations granted in Q2 2013 was 353, which is unchanged y/y, and compares to a decline of 11.94% recorded in Q1 2013.
• Total number of planning permissions for ACRs in H1 2013 stood at 685 - down 6.16% y/y.

So in terms of actual permissions issued: we have a bit of a soggy outcome: nothing is up, everything is down y/y… Declines have accelerated in Q2 compared to Q1 in four out of five categories; and H1 figures are very poor for all, but one category. In terms of units approved: we have a decent uptick. I would suggest we use caution and see if the activity picks up from here on.

Three charts to illustrate:

25/6/2013: Planning Permissions in Ireland: Q1 2013

The latest data on Planning Permissions was released by the CSO under a rather cheerful headline: "Dwelling units approved up 24.7% in Q1 2013" which prompted me to start writing a positive note. However, having updated the database, I could not believe my eyes. Not until the third bullet point in the release do you get the sense as to what is really going on in the sector - the fact confirmed by looking at CSO data, rather than reading the CSO release which focuses the top points of analysis on positive side of select sub-components of the overall sector performance. So here are the facts, as conveyed to us by the data itself.

In Q1 2013, total number of planning permissions granted in Ireland for all types of construction stood at 3,275, which is 1.35% down on Q4 2012. This marks de-acceleration of seasonally-driven 17.96% q/q decline recorded in Q4 2012. However, on an annual basis, allowing for some seasonality controls, overall number of planning permissions granted in Q1 2013 was down 2.76%, which contrasts against an annual increase recorded in Q4 2012 of 1.13%.

In summary, things are not going well at all. Q1 2013 marks an absolute historic low for any quarter since Q1 1975! That's right: we hit an absolute historic low in 37 years and CSO release says things are 'up' by focusing on sub-series before it reports in the text the actual aggregates.

In charts below, I marked current sub-period (since Q1 2010) low against historic low before the current crisis. Take a look.

Note: in Q1 2013,

• Total number of planning permissions hit a historic low (as mentioned above)
• Total number of permissions for dwellings stood at 862, the second lowest after the historic low of 832 hit in Q4 2012.
• Total number of permissions for 'other new construction ex-dwellings' stood at 785, which is above the historic low of 636, but still marks a decline q/q.
• Number of permissions for extensions hit a historic low.
• Number of Alterations, conversions, renovations etc hit a historic low. 

Again, I find little to cheer in the above...

4/4/2013: Irish Planning Permissions 2012 data

Per data released on March 22 by CSO, Irish Planning Permissions for Construction have continued to collapse in 2012. Full year data shows that:

• In 2012 total number of all types of planning permissions issued in the state stood at 14,407 - an all-time record low (with records starting in 1992), down 9.91% on 2011. 2010-2011 rate of contraction was 15.11% and 2009-2010 rate of decline was 27.64%, so naturally for such steep drops in previous years, the rate of annual declines is moderating. 
• From the pre-crisis peak, number of planning permissions is now down 76.90%
• Planning permissions for dwellings fell to 3,643 in 2012, down 23.58%, having fallen 24.89% in 2010-2011 and 38.85% in 2009-2010. Compared to peak, the permissions are down 86.76% to a new historical low.
• Planning permissions for other new construction rose in 2012 to 3,407 from 2,964 in 2011, a rate of increase of 14.95% y/y that follows declines of 7.52% in 2010-2011 and 29.01% in 2009-2010. Relative to peak, 2012 level of permissions for other new construction are down 82.4% against absolute minimum reached in 2011 when these were down 84.72% relative to peak.

In square footage terms, planning permissions issued

• Fell 21.56% y/y for all types of new construction (these are now down 86.67% on peak, hitting a new historical low);
• Fell 39.48% y/y for dwellings (these are now down 90.89% on peak, hitting a new historical low);
• Fell 7.44% y/y for other types of new construction (these are now down 86.78% on peak, hitting new historical low);
• Rose 0.52% for extensions (these are now down 68.87% on peak, having hit the bottom at -73.41% on the peak in 2011).

At certain point in time (soon, one assumes given the rates of decline on peak already delivered), a broom shed construction somewhere in West Meath will qualify as an uplift in the market....

14/03/2013: Irish Construction & Building Sector Activity 2012

Latest index for Irish Building and Construction Production volumes and value is out today, confirming what I wrote about on the foot of new planning permissions data (here), namely that Construction and Building sector continued to shrink in 2012 and there is little hope beyond some public spending projects uptick for the already devastated sector.

Top headline numbers for full year 2012 (these are imputed from Q1-Q4 2012 data):

• Value index for all production activity in Building and Construction sector declined from 25.9 in 2011 to 24.7 in 2012 (using base of 2005=100). This means all activity in value terms has hit another historical low for the series and is running at less than 1/2 of the level of activity in 2000 when the index was reading 53.5.
• 2012 was the sixth consecutive year of declines in the sector activity by value and volume. 
• Peak sector activity was registered in 2006 with index reading of 109.7, which implies a decline from peak through 2012 of 77.5% in value terms.
• Value sub-index for Building excluding Civil Engineering has dropped from 20.9 to 18.2 between 2011 and 2012 (decline of 12.8% y/y) and is down 83.2% on peak attained in 2006.
• Residential Building value sub-index is down to 8.6 in 2012 from 10.2 in 2011, marking a decline of 92% on peak (2006).
• Non-residential building sub-index for value is down to 55.2 from 61.7 in 2011 and is 53.9% below peak levels attained in 2008.
• Civil engineering value sub-index was up in 2012 to 66.0 from 58.6 in 2011 (+12.6% y/y) but is down 49.3% on peak attained back in 2007. 

Similar story is traceable across the volume of production indices.

Charts to illustrate (note, charts are referencing a different base - instead of 2005=100 these have been rebased to 2000=100 for more clear compounded effect illustration):

11/3/2013: Property tax and the markets for property investment

The Irish Government is about to bring in a property tax covering only residential property and excluding land holdings. This is the market for real estate investment that the Government is about to hammer even more:

All permissions for new residential construction are down 87.6% in 2012 (based on estimated full year figure using actual data through Q3 2012) relative to peak. The levels are so low, we are at a historical low now and 2012 was down on 2011. Declines in permissions were recorded every year since 2008. For dwellings - full houses - planning permissions are down whooping 91.8% in 2012 compared to peak attained back in 2005!

Overall planning permissions are down 77.5% on peak. Again, historical series low in 2012 (based on estimate):

This is the same Government that has attempted to 'revive' the property markets via various tax breaks in 2011-2012. Talking about 'policy consistency' then...

27/9/2012: Planning Permissions, Ireland, Q2 2012

Planning Permissions for Q2 2012 were published today for Ireland, offering basically continuation of the trend established the end of 2010 which marks slower rate of decline in overall planning permissions. Chart below illustrates:

Total number of planning permissions rose 9.03% q/q in Q2 2012 to 3,672 (still 13.48% down on Q2 2011 and 78.8% down on peak).

In Q2 2012, overall number of planning permissions in Ireland for new dwellings dropped to 942 from 957 in Q1 2012 (-1.57% q/q), which is down 25.47% y/y and down 87.5% on peak. In contrast with new dwellings, other new construction permissions rose from 695 in Q1 2012 to 828 in Q2 2012 (up 19.14% q/q and up 14.84% y/y), which is still down 86.7% on peak.

Annual rates of change clearly show that the slowdown in the rate of decline is now persistent over two quarters for total number of planning permissions, while there is an acceleration in the rate of decline in the planning permissions for new dwellings.

Average square footage relating to new permissions granted is now moving sideways since Q3 2011, suggesting there is really no life in the market for new construction, even in the potential pipeline of work planned.

Sorry to say this, but no good news here.

29/6/2012: Irish Planning Permissions: Q1 2012

After 5 years of continued destruction in the construction sector in Ireland, one simply has to re-test the accepted paradigms that things can continue falling indefinitely. I mean, yes, there's a bound to how far down new construction permits for new dwellings can go, but... who would have thought it might be a zero?

Here are the latest stats on approved Planning Permissions in Ireland for Q1 2012. Not a pretty sight - be warned.

In Q1 2012, number of new planning permissions for new dwellings stood at 957 - a new all-time low for Q1 figures, up 0.2% on Q4 2011, but down 25.1% year on year. Compared to peak, the number of new dwellings being planned in Ireland is now down 87.3%.

Other New Construction permits rose to 695 in Q1 compared to 681 in Q4 2011, but Q1 figure this year is the lowest of all Q1 readings in history. Y/y permits are down 0.7% and compared to the peak, they are down 88.8%.

Extensions approvals rose from 1,312 in Q4 2011 to 1,339 in Q1 2012, marking another historical low for Q1 figures, down 18.2% y/y and now 74.3% below their peak.

Alterations and Conversions permits rose to 377 from 335 in Q4 2011 and are now at a new historical low for Q1 readings. Y/y permits dropped 6.9% and relative to peak they are down 55.0%.

Thus, total construction permits awarded are now at 3,368 in Q1 2012, new historical low for Q1 readings, but up on 3,283 in Q4 2011. Y/y all construction permits are down 16.2% and reltive to peak they are off 80.6%.

These are ugly numbers, folks.

Charts to illustrate:

21/12/2011: Irish Planning Permission Q3 2011

In Q3 2011, there were 2,512 planning permissions granted for dwelling units, compared with 4,641 units for the same period in 2010, a yoy decrease of 45.9 %.

However, overall, Q3 2011 number of new dwellings approved stood at 1,271, up 0.55% qoq and down 22% yoy. Relative to peak in Q2 2004, the number of new dwelling units approved declined 83.2% in Q3 2011.

Per CSO: 

• Planning Permissions were granted for 1,887 houses in the third quarter of 2011 and 2,817 in the third quarter of 2010, a decrease of 33.0%. 
• Planning permissions were granted for 625 apartment units, compared with 1,824 units for the same period in 2010, a decrease of 65.7%.
• Total floor area planned was 969 thousand square metres in the third quarter of 2011. Of this, 48.0% was for new dwellings, 29.7% for other new constructions and 22.3% for extensions. The total floor area planned decreased by 31.4% in comparison with the same quarter in 2010.
• Planning Permissions for new buildings for Agriculture rose to 194 this quarter. This compares to 132 permissions in the same quarter of 2010.

More detailed analysis of CSO data shows that total number of new permissions rose 4.76% qoq in Q3 2011 from 4,244 in Q2 2011 to 4,446. However, Q3 2011 total number of permissions was down 16% yoy and down 74.4% on the peak attained in Q3 2007.

Charts below illustrate:

Rates of decline, degrees of (construction sector) misery

Earlier today (here), I gave some figures from the CSO data release on planning permissions. Here is what I wrote:

"Also per CSO release, the number of dwelling units approved was down 22.4% in year to the end of Q4 2008. In Q4 2008, planning permissions were granted for 10,375 houses as opposed to 13,135 in the Q4 2007, a decrease of 21%. Only 3,392 planning permissions were granted for apartment units, compared with 4,598 in Q4 2007, a decrease of 26.2%. The total number of planning permissions granted for all developments was 8,977, as compared to 12,330 in Q4 2007, a decrease of 27.2%. Dire stuff once again. I will do the detailed analysis of the sectoral decline dynamics in a follow up to this post."

So, as promised here are some graphs illustrating the dire state of affairs in construction industry.

First chart below shows two things:

1. Numbers of permissions granted (annual totals) for main categories of dwellings and in total - these are now clearly falling at the fastest annual rate;
2. Total area of all construction projects applied for is also falling at the fastest rate of decline.
   

Now, the next chart shows total number of permissions granted per quarter. Here, the most dramatic trend is also found in 2008, most specifically in Q3 and Q4 2008, when quarterly rates of decline in total number of permissions granted were the steepest for any quarter since Q3 2000. And the rates of decline are accelerating, relative to Q1-Q2 2008.
Lastly, more detailed quarterly date below, by each broader category of permits. I also included trend lines for the period of peak-to-present contractions, showing that Q4 2008 dynamics were consistent with generally accelerating deterioration in all categories of permits, save for 'Other'. This means that we can expect this category to actually fall further and faster in months to come.
So here you have it, for construction industry - there is no bottom in sight, yet...