Showing posts with label Planning Permissions. Show all posts
Showing posts with label Planning Permissions. Show all posts

Thursday, December 19, 2019

19/12/19: Irish Planning Permissions 3Q 2019: Some Goods, Some Bads


The latest Irish data for Planning Permissions approvals is a mix of some good news, some bad news and some ugly trends. Here is the summary of them for 3Q 2019:

  1. Overall, planning permissions numbers for housing applications are up 4.02% y/y - this is the good news. Better news: cumulative 1Q-3Q 2019 numbers are up 7.12%  on the same period in 2018.
  2. New dwelling planning permissions are up 6.01% y/y - this too is the good news. Also exciting: cumulative 9 months permissions are up 6.33% y/y.
  3. Other new construction ex-dwellings permissions are up 6.29% - another bit of good news.
  4. Extensions and alterations-related planning permissions are up only 1.42%. But this is offset by the cumulative 9 months gain of 7.65% y/y. Which is a nice number.
  5. Bad news: private homes permissions are up only 1.13% y/y in 3Q 2019, and worse news: the same are down massive 5.57% y/y on a cumulative basis for the first 9 months of 2019.
  6. Great news: apartments permissions (for units, not aggregated over schemes) are up massive 80.15% in 3Q 2019 y/y and are cumulatively up 86.81% y/y for the first nine months of 2019.
  7. Average area of the houses for which new permissions are grated is up 0.82% in 3Q 2019 compared to 3Q 2018, but average area of the apartments with new permissions granted is down big time: down 14% y/y in 3Q 2019 and on average down 7.1% in the first 9 months of 2019.
So we are planning more apartments (good), not as significantly more homes (bad), but our apartments planned are getting smaller (bad). 



Now for some other bad news, or trends, rather. 

Given the demographic demand and the state of construction industry in the post-crisis period, we are continuing to under-supply new housing to the markets. Based on the assumed demand for 25,000 new homes annually, cumulative undersupply of new permissions to build residential units since 1Q 2010 currently stands at around 81,900 units and although this number is finally declining (since 4Q 2017), at the current rate of new planning permissions approvals (Q1-Q3 2019 figure), it would take almost 6.5 years to clear the backlog. That is, assuming in the mean time, there is no new recession to knock out the wind from the building and construction sector, and/or no significant inward / return migration to boost demand. Accounting for depreciation at ca 4100 units per annum (https://www.savills.com/insight-and-opinion/savills-news/273944/john-mccartney--housing-obsolescence-commonly-overestimated--and-depreciation-heavily-concentrated-in-rural-ireland) extends this horizon to 10.3 years. 

Thursday, March 26, 2015

26/3/15: Irish Planning Permissions 2014: The Crisis Drags On


CSO published Q4 2014 figures for Planning Permissions in Ireland, confirming the trend toward de-acceleration in the already weak data.

Here are the details.

On an annual basis:

  • There were 15,724 planning permissions granted in Ireland in 2014 for all types of construction, up 13.11% y/y but still down 1.7% on 2011. Current level of planning permissions is below 2011 reading and is below any year between 1992 and 2011. Historical average from 1992 through 2014 is 33,333 which means current running rate is more than 2 times lower than the average. We are in the third worst year in the series history.
  • Dwellings permissions rose from 3,316 in 2013 to 3,606 in 2014 (+8.7%). 2014 level of activity is below any year from 1992 through 2012. Dwellings permissions granted in 2014 were 24.4% below 2011 levels and represent the second worst year in history of the series. Historical average for 1992-2014 period is for 14,882 dwellings permissions to be granted, which means that in 2014, levels of dwellings-related planning activity was more than 4 times lower than historical average.
  • Excluding dwellings, all other new construction-related permissions granted rose to 4,299 in 2014 from 3,431 in 2013 (+25.3% y/y), and up 45.0% on 2011, but still 77.8% below pre-crisis peak and 1.4 times below the historical average. 2014 was the third worst year in history for these sub-series and only marginally above the second worst year. 
Charts to illustrate:


Key point: given the absurdly low levels of activity in 2013, growth in 2014 is far from impressive. The bottlenecks created in 2010-2014, amounting to cumulative shortfall in planning permissions of 108,820 permissions relative to 1997-2001 average, and for dwellings this shortfall is 82,309 permissions. This shortfall is, put simply, catastrophic and is only increasing, given the current trends to-date.

Next: floor area relating to new permissions:


As shown in the chart above, 
  • Floor area relating to planning permissions granted for all types of construction fell in 2014 to 3,184,000 sqm from 3,338,000 sqm in 2013 (down 4.6% y/y), representing a decline of 21.9% on 2011 levels. Relative to peak, total floor area approved is now down 86.7% and 2014 level of activity is 3.3 times lower than historical average (1992-2014).
  • Planning permissions approved for dwellings had underlying floor area of 1,366,000 sqm, up 4.7% on 1,304,000 sqm approved in 2013.  2014 reading is 89.6% down on pre-crisis peak, and 4.5 times below the historical average activity.
  • Floor area approved for non-dwellings permissions fell from 1,306,000 sqm in 2013 to 1,064,000 sqm (-18.5% y/y) and is down 88.6% on pre-crisis peak. Activity in this area is running 2.9 times lower than historical average.
Key points: 2014 was the worst year on record for the construction permissions activity measured by the total floor area of approvals, with overall square meterage of new permissions approved falling to an absolute historical low. 2014 was the third worst year on record for square meterage approvals for new dwellings construction and the absolute historical low for non-dwellings activity.

Summary of on-peak changes and historical shortfalls below:


Overall, 2014 data on planning permissions suggests little real improvement in the investment pipeline relating to construction sector. This evidence does not support the National Accounts tale of revival in domestic real estate investment and investment in general. According to the National Accounts, building & construction sector activity and Gross Fixed Capital Formation have both been running in excess of 2011 levels in both 2013 and 2014. Yet, there is no corresponding performance in planning permissions terms. This strongly suggests that current construction sector activity relates predominantly to past permissions pipeline, implying downside risk to the sector in the near future; and that our real estate investment 'boom' is driven predominantly by the re-sale markets (flipping of existent capacity, rather than creating new capital stock additions).

Tuesday, June 24, 2014

24/6/2014: Planning Permissions in Ireland: the 'Recovery' is Still Worse than the 1980s Crisis


There are many drivers for planning permissions applications in Ireland, including traditional ones (economic fundamentals, demand, credit supply availability etc) and idiosyncratic (changes in planning regime etc). Not to comment on either of these, here are the latest stats (through Q1 2014) on the subject.

Q1 2014 registered an uplift in total number of planning permissions granted, which rose y/y by 17.0%. This sounds like a large number, except the problem is - it comes off such a low base that Q1 2013 actually was an absolute historical low for planning permissions for any quarter since Q1 1975. In real terms, as the chart below clearly shows, since Q1 2011 through Q1 2014, maximum number of planning permissions granted barely reaches previous historical low in Q1 1988. That's right: the worst of the 1970s-1980s is the best of 2011-present range. In fact, Q1 2014 'improved' activity in terms of planning permissions is 11.7% lower (that's right - lower) than 1975-1999 lowest point.



Dwellings permissions are currently sitting 38.9% below their absolute low of 1975-1999 period, although these did rise 3.36% year on year.



In terms of total square meters relating to permissions granted, things are no better. Year-on-year volume of permission granted by square meters is down 20% for all applications. From Q1 2011 through Q1 2014, total square meters of permissions granted have been trending basically in line with the lowest levels reached in the 1980s.



I am not sure if anyone can tell with any degree of confidence as to what the effect of new regulatory regimes is on these numbers, but one thing is very clear - the recovery is not to be seen anywhere in the above numbers, yet. Despite some reports in the media and from the industry suggesting that things are getting better and better.