Any inquiry must avoid witch-hunt and provide a rigorous and stable development plan, writes ROB KITCHIN.
AS WELL as a catastrophic failure in Ireland’s banking and financial regulatory system, there has been a disastrous failure of the planning system. The Government has two principal levers through which it can regulate property development. The first is through fiscal policy with respect to regulating access to credit and determining taxation rates. The second is through planning policy, the zoning of land and the granting of planning permission.
Explanations of the Irish property bubble have focused almost exclusively on the former while, to date, the role of the planning system in creating the property bubble has been little considered. And yet, the banks could have lent all the money they desired, but if zonings and planning permission were not forthcoming, then development could not have occurred in the way that it did.
In a housing boom, planning should act as a counter-balance to the pressures of development to maintain a stable housing market and try to prevent boom-and-bust cycles. Planning should provide checks and balances to the excesses of development and act for the common good, even if that means taking unpopular decisions. However, during the Celtic Tiger period a laissez-faire approach to planning predominated at all levels of governance.
Planning decisions were not sufficiently evidence-based, and in many cases did not take account of realistic long-term demographic demand, market conditions or issues of sustainability. Cautious voices were marginalised and ignored.
Both the fiscal and planning levers of development were overly pro-growth.
As a result, not only was there an unsustainable growth in property prices, but this was accompanied by a property building frenzy that led to a significant oversupply of housing (as well as of offices, retail units and hotels) in almost all parts of the country. Between January 1996 and December 2005 more than 550,000 housing units were built. In the same period, the number of households grew by just 346,000.
Yet from 2006 to 2009, 244,000 new units were built, despite a vacancy rate of 12.2 per cent, excluding holiday homes, in 2006.
While local authorities like Fingal, Kildare, Galway city, Meath, Wicklow and south Dublin did a reasonable job at keeping supply and demand aligned, others did not heed good planning guidelines and regional and national objectives; did not conduct rigorous demographic profiling of demand; and did not take into account the fact that much of the land zoned lacked essential services such as water and sewage treatment plants, energy supply, public transport or roads.
Instead, permission and zoning were facilitated by the abandonment of basic planning principles by elected representatives on the local and national stage and driven by the demands of local people, developers and speculators and ambitious, localised growth plans framed within a zero-sum game of potentially being left behind with respect to development.
Further, central government not only failed to adequately oversee, regulate and direct local planning, but actively encouraged its excesses through tax incentive schemes and the flaunting of its own principles as set out in the National Spatial Strategy through policies such as decentralisation.
The level of over-development that has occurred could take years to correct and seriously hamper the recovery of the housing market and the operation of Nama.
At the National Institute for Regional and Spatial Analysis, we are calling for an independent review of the operation of the planning system during the Celtic Tiger years to be undertaken to consider fully the role of planning in the creation of the property bubble, similar to the Honohan (2010) and the Regling and Watson (2010) reports on banking and financial regulation.
The review would examine planning policy formation and application and the organisation, operation and regulation of planning within and across different agencies and at all scales in Ireland. It would investigate all aspects of the planning system and its operation, including the extent to which there was: joined-up thinking between agencies and authorities; high-quality data and evidence-informed decision-making; strong levels of oversight, monitoring and control of clientelism and cronyism at play in the system.
The inquiry should not take the form of a witch-hunt or a blame game, but rather constitute a systemic review of how the planning system failed to counter and control the excesses of the boom and provide a more stable and sustainable pattern of development.
There are seven key issues that need to be addressed before consumers regain confidence, property prices bottom out and the housing market starts to function properly.
Supply and demand will need to be harmonised. There has to be a sustained growth in the economy with an associated fall in unemployment. House prices have to align more closely to average industrial earnings. Affordable credit has to be available for first-time buyers and those trading up. The uncertainties concerning Nama and its operation have to be dispelled, especially since it will be controlling a sizeable share of property and land. This necessitates full transparency of the agency’s workings and the assets it is managing.
Consumers have to be satisfied that the banking crisis is truly over and that financial institutions are properly regulated. And, finally, substantive changes need to occur in the planning system to ensure that it works for the common good and produces sustainable development.
In the short term, we need a clear plan of action to deal with ghost estates and to implement this plan speedily. This should include addressing the social and economic conditions of those living on such estates and a full assessment of alternative uses.
Our analysis suggests that there is little need for housing development in the State in the immediate future beyond selected social housing provision. This is not to say that there is no requirement for construction, however.
Where construction could be fruitfully undertaken is with respect to public facilities like schools and hospitals, public transport, roads, energy and broadband infrastructure.
Such a targeted capital investment could, on the one hand, stimulate the economy in terms of employment and investment and provide multiplier effects across the private sector and, on the other, provide world-class infrastructure to facilitate and encourage indigenous growth and inward investment. Any such investment should align with the National Spatial Strategy and National Development Plan and be delivered through a rigorous, responsible and sustainable planning system.
Prof Rob Kitchin is director of the National Institute for Regional and Spatial Analysis at NUI Maynooth. He is one of the authors of yesterday’s working paper from the institute, A Haunted Landscape: Housing and Ghost Estates in Post-Celtic Tiger Ireland along with Justin Gleeson and Dr Cian O’Callaghan of NIRSA at NUI Maynooth, and Dr Karen Keaveney of the school of spatial planning, architecture and civil engineering, Queen’s University, Belfast