Deepening Compact Growth

Guest post by Noel Cahill of NESC 13/06/24

A new report from the National Economic and Social Council (NESC), Deepening Compact Growth in Ireland, examines the concept of compact growth, sets out the evidence on its benefits and possible costs, assesses Ireland’s performance and considers how compact growth could be strengthened. Huge thanks to Noel Cahill of NESC, who discusses the key issues from the report in today’s guest post.

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An updated National Planning Framework (NPF) was recently adopted by government and the Oireachtas. This confirms compact growth as the first strategic objective of the NPF. In simple terms compact growth means having new development in cities, towns and villages and avoiding ‘urban sprawl’. There is not a single agreed definition these terms, but the following definition captures the critical dimensions of sprawl:

“…the process in which the spread of development across the landscape far outpaces population growth. The landscape sprawl creates has four dimensions: a population that is widely dispersed in low-density development; rigidly separated homes, shops, and workplaces; a network of roads marked by huge blocks and poor access; and a lack of well-defined, thriving activity centers, such as downtowns and town centers. Most of the other features usually associated with sprawl — the lack of transportation choices, relative uniformity of housing options or the difficulty of walking — are a result of these conditions” (Ewing et al., 2002 from EEA, 2016: 21).

Compact growth is the opposite of sprawl so can be defined as ‘any development pattern with moderate to high densities, mixed uses, strong centres and well-connected streets’ (Hamidi et al., 2015). The theory is that these four characteristics work together to make it easy to get around through public transport, walking and cycling and make it easy to access the amenities of daily living without depending on a car.

Benefits

The NESC report documents extensive empirical evidence from the literature that compactness does indeed promote sustainable travel. By reducing car use, compact growth in turn leads to lower carbon emissions and a reduction in other costs of car travel including injuries and deaths. Compactness also reduces energy use in buildings. The evidence showing that compact cities have higher innovation and productivity is particularly robust. Compact development supports better access to services, enhanced efficiency in the delivery of public services and lower infrastructure costs.

There may, however, be some downsides to compact growth, most significantly reduced housing affordability. The challenge is to effectively manage compact growth to achieve the benefits while minimising any negative side effects.

National Planning Framework and Compact Growth

The NPF sets a high-level target that 40 per cent of new housing development takes place within the existing built-up areas of cities, towns and villages. The NESC report shows that this is being achieved. In fact, the share of housing development within existing built-up areas for the State in 2023 was 67.2 per cent, up from 65.0 per cent in 2016. However, it also argues that this target is a modest one and that it continues to be the case that the fastest growth is at the edges of and outside towns and cities.

Another target set in the NPF is that 50 per cent of the population growth over the period to 2040 be in the five cities. This was not achieved in the period 2016 to 2022 during which period the share of population growth in the cities was 32 per cent. While the target doesn’t relate to this period, a major shift would be required to achieve this by 2040.

The pattern of housing development in the eastern part of Ireland in recent years has been much less dispersed compared to the previous housing boom when the fastest growth in, and highest level of, housing completions were in the outer Leinster counties, i.e. the counties in Leinster beyond Dublin, Meath, Kildare and Wicklow. In each year from 1997 to 2007, completions in these counties were multiples of the level of Dublin city. This is no longer the case today as can be seen in the chart below.

Housing completions in Dublin and Leinster, 1970–2024

Source: CSO Database, New Dwelling Completions. Data based on ESB connections up to 2010.

Obstacles

If compact growth has multiple benefits and is government policy, why is it sometimes difficult to achieve? There are several factors. The reforms made to Ireland’s planning system limit the ability of local authorities to excessively zone land which was a problem in the past. However, assuming land is zoned for compact development and the planning guidelines are adhered to, there are not yet established practices to ensure that the land zoned is developed in a timely manner. The Deputy Planning Regulator has stated that there is a one six in chance that land zoned for development is developed within the planned development period. It is reasonable to zone more land than would be required for development within a particular period, but the gap between zoning and development is very large for some local authorities. This can arise from land not being serviced or infrastructure constraints, lack of viability or lack of interest in the landowners in developing or selling their land.

Where zoned and brownfield land is not developed, there is pressure for more zoning. The oversight of the Office of the Planning Regulator can prevent this, but this creates the risk of insufficient housing output as well as granting more permissions for single houses in areas not zoned for housing.

The search for affordable housing may lead people to avail of accommodation far from where they work and that is often car dependent. This works against compact growth. Related to this, and impacting affordability, are two factors:

1. Brownfield development tends to be more costly for developers than greenfield, and

2. It is more expensive to develop apartments than houses.

Other factors that limit compact development include gaps in infrastructure in urban centres and lack of effective co-ordination between relevant agencies.

Deepening Compact Growth

Compact growth requires a more active approach to the development of land. NESC has previously argued that ‘the central lesson from countries with effective approaches to land, urban development and housing is the need for an activist, hands-on, developmental approach, led by public bodies but engaging a wide range of private actors’ (NESC, 2018:57, see also).

The Residential Zoned Land Tax, coming into operation this year, may also help to mobilise land for development NESC also recommends increased investment in infrastructure. This includes both major urban transformation projects and investment in essential infrastructure, including water services, to facilitate housing in towns and villages. Major investment in public transport in conjunction with transport-orientated development are critical to the realisation of compact growth. Moreover, if investment is focused on land in public ownership, there is more scope to effectively master-plan new developments and to recover some of the cost through sale or leasing of land.

The Land Development Agency (LDA) is playing an important role in developing land in urban centres for affordable housing, primarily cost rental. It also has a further mandate to engage in strategic land assembly. The acquisition of land by a public body and then providing serviced land for development in accordance with plans for the area would contribute to aligning development with plans for compact growth. The LDA is well capitalised but does not have a budget to invest in infrastructure.

There are a number of commitments in the Programme for Government indicating a willingness by government to take a more active approach to mobilising land if required. These include creation of a new strategic fund to invest in infrastructure, to acquire land, assemble sites, de-risk sites in existing towns and cities to maximise their potential growth; enactment of a new Compulsory Purchase Order (CPO) Bill with streamlined and strengthened CPO powers to activate underutilised land for home building; strengthening the LDA’s CPO powers; and establishing Land Activation Units in each local authority.

The NESC report makes several other recommendations including:

· Develop arrangements to enhance co-ordination between public infrastructure bodies and others. For large areas of development, put in place dedicated institutional arrangements.

· Provide stronger incentives for brownfield development.

· Continue to seek reductions in the construction costs of apartments as well as houses. Implement the recommendation of the Residential Construction Cost Study Report (2023) and advance the six lines of action on modern methods of construction (MMC) identified by NESC (2024).

· Increase investment in cost-rental homes: this will contribute to an increased supply of homes at more affordable rental levels in urban areas.

· Set rent controls – which the Council believes will continue to be required beyond 2025 when the current rules are due to expire – on a more flexible basis to support increased supply.

· Place more emphasis on densification of existing areas including facilitating more use of corner sites, gardens, backlands and mews developments.

Ireland has begun to move towards compact growth but faces obstacles in realising this goal. NESC concludes with the observation that ‘it is vital that this re-orientation is sustained and advanced by all relevant departments, agencies, utility providers, local authorities and developers’.

Events & news

The final webinar in our Making Rental Housing Affordable series will take place on June 25th, looking at the very topical issue of the Germany reference system. The speaker is Stefan Kofner, the country’s leading expert on this issue. Register here. Michelle Norris’ seminar on the role of land policy in social housing in Austria, England and the Netherlands is now available to watch here. The Raise the Roof coalition will hold a protest outside the Dáil on the evening of Tuesday, June 17th. Finally, the Simon Communities webinar on Homelessness in Europe is now available to watch here.

What I’m reading

A reminder that NESC’s Deepening Compact Growth in Ireland is available here . An extended version with more research evidence is also available. The Housing Agency’s report on the RPZs, which informed the recent reforms, can be found here. The appendices are also worth a look. The report is a must read for anyone interested in this issue and also brings together much of the data we have in Ireland on rents, supply and rent regulation. Property Industry Ireland have also published their submission on rent regulation. The Ombudsman has published their investigation on the HAP scheme.