New figures from estate agent Sherry Fitzgerald show a drop in transaction activity in the development land market in the first six months of the year.
Between January and June, the value of land sold for development purposes fell to a record low for this period of €134 million - down 65% on the same period last year.
Jean Behan, Senior Economist, Sherry FitzGerald Research said this is due to various challenges currently facing the development land market.
"Rising borrowing costs and persistently strong construction cost inflation are impeding activity, and these are further exacerbated by ongoing delays in the planning system," she said.
"This is impacting the viability of development projects and making it more difficult for developers to secure finance."
The figures show there were no transactions over €15 million in value.
The largest proportion, 56%, were in the €1 million to €5 million cohort, while a further 29% of transactions ranged between €5 million and €15 million in value.
The regional centres of Cork and Galway each accounted for considerably large shares of development land turnover during the period at 15% and 14% respectively.
This reflects a number of large transactions in these locations. Just over half of development land spend, 52%, was located in the Dublin region, markedly lower than in previous years.
Residential land accounted for 58% of sales turnover in the first half of the year, while the proportion comprising land for commercial or industrial use was much lower than that seen in the past two years at only 14%.
A further 25% consisted of land with mixed use potential, including a number of large landbanks that could potentially be used for either residential or commercial development.
Looking to the remainder of the year, Sherry Fitzgerald said activity levels are likely to remain subdued amid the current interest rate environment.
Although the government has taken various steps to rectify problems in the planning system, it said it will take time to clear the backlog and to "restore confidence in the system".
