Planning Practice, Housing Oversupply and Ireland's Housing Boom and Bust

The economic boom was accompanied by galloping house price inflation. Between 1996 and their peak in 2006, Irish house prices increased by 292 % in nominal terms, with steep year-on-year increases, particularly between 1996 and 2000 (Department of Environment 2015). In common with many other developed countries, this development was driven by marked expansion in credit availability. However, as in Spain (Romero 2012), price inflation in Ireland was also accompanied by radical growth in new housebuilding, the spatial distribution of which did not match the distribution of population or economic growth.

As Norris and Coates (2014) explain, these developments generated serious socio-economic risks. The scale of the building boom meant that construction accounted for a very large proportion of employment and GDP. The scale of the house price and credit boom meant that government and the banking sector became heavily reliant on this source of revenue. Therefore, the property market crash of 2007 and a subsequent

This chapter is authored by Michelle Norris, Nicole Gurran, Glen Bramley.

© The Author(s) 2017

M. Norris et al., Urban Planning and the Housing Market, DOI 10.1057/978-1-137-46403-3_7

radical decline in housebuilding is now recognised as contributing to the depth of Ireland’s economic collapse. This culminated in Ireland’s entry to an International Monetary Fund (IMF) and the EU-funded adjustment programme in 2010 (Norris and Coates 2014). The housing market boom and subsequent collapse were accompanied by a national vacancy rate which far exceeded the north European average, reaching 16.7 % in 2006 (Fitz gerald 2005; Norris and Winston 2009). The effects of the bust were particularly strong in rural areas where housing over-supply was strongest. In these contexts, construction accounted for a particularly large proportion of jobs, so the collapse in construction jobs was particularly serious. The legacy of the building boom in rural Ireland was epitomised by the large number of unfinished, empty ‘ghost estates’, of which there were around 620 in the years immediately following the crash (Kitchin et al. 2010). But the total number of unfinished projects was around 3000 developments across the country, with 668 remaining unresolved by the end of 2015 (Housing Agency 2015).

While these dramatic events provide the main story, at the same time, the 2000s were a period of innovation and development in the way the planning system addressed housing. A new national spatial strategy was introduced, local authorities were encouraged to develop needs-based plans for social housing, and a specific mechanism was introduced in Part V of the Planning Act 2000 to require the provision of affordable housing within general sites. While these innovations did not fully work out as expected at first and were overtaken by the dramatic market downturn after 2007, they can be seen as laying the foundations for the longer-term policy framework which is now emerging.

This chapter explores the ways in which Ireland’s planning process enabled over-supply in rural areas, coupled with under-supply in the largest city of Dublin, by enabling extreme rural over-zoning and facilitating the dominance of local political voices at the expense of national government policy (Norris and Shiels 2007; Kitchin et al. 2012; Walsh 2012; Counsell et al. 2014). It traces the ways in which the liberal planning regime of Ireland facilitated a very responsive housing market in the context of high demand for housing investment, but neglected fundamental considerations about underlying population growth, the environmental and heritage impacts of zoning decisions and of planning proposals, and the suitability of particular sites for housing development. The first section of this chapter outlines patterns of housing demand and supply in Ireland, focussing particularly on the boom and bust cycle between 1996 and 2006, but contextualising this period with reference to previous and subsequent periods. The analysis also highlights sharp variations in the geography of new housing supply. Secondly, the chapter sketches the main characteristics of the Irish planning system and recent changes to the system which may have facilitated the excessive supply response. The third section of this chapter examines these characteristics in greater detail along with other potential drivers of Ireland’s unbalanced housing supply. Finally, we also consider developments in planning’s role in the delivery of affordable and inclusionary housing.

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