The CIF in Cork says that supply of housing in the city in no way matchs demand. According to CIF Regional Director, Conor O’Connell, statistics in the first 9 months of 2015 show that only 658 units commenced construction in Cork City & County.
Of those 346 were one-off units which will not reach the market. Therefore in whole of Cork City & County for the first 9 months of 2015 it is likely that only 212 units will reach the market. It is estimated that the annual demand for housing in the Cork City & County area alone is in excess of 2,500 units per annum.
“Recent reports from daft.ie showing an increase of 13.5% in rents in a three month period illustrate the growing crisis in the Cork Region in relation to housing supply,” says Conor O’Connell.
“Housing is an essential item of infrastructure for society as a whole and for the success of the Cork economy.”
The construction industry is being hampered in delivering this much needed housing infrastructure for Cork by a multitude of problems that have been created over the last number of years including:
- a lack of development finance,
- restrictions on mortgage availability,
- a lack of serviced and zoned land,
- increased regulatory costs
- a lengthy planning process.
“The issue of costs is one area that can be immediately addressed by the Government to ensure that proposed housing developments can become viable again,” says the Regional Director. “It is estimated that 40% of the cost of any house goes back to the Government in various levies and other forms of taxation. Costs need to be reduced immediately as this is the one area within the immediate control of the Government. VAT, development contribution scheme charges, bonds and other charges and levies alone could amount to €50,000 per unit for a standard 3 bed semi-detached house. Other regulatory cost add to this taxation burden for anyone wishing to commence construction.”
“Given these high regulatory cost, coupled with Central Bank rules which impose strict lending criteria on financial institutions to mortgage applicants means that the viability of a large number of developments is squeezed.”
“If we are serious about addressing the growing crisis in housing supply, which is having dramatic effects on the rental market, on society as a whole and on inward investment then immediate measures must be introduced to tackle the cost structures within the industry and all the other factors that are limiting the supply of housing. Residential units can be and will be supplied by the private sector once development restrictions on the industry are addressed,” he said.
Statistics show that housing completions in Cork City & County are likely to remain at historically low levels
In 1970, which was the previous lowest year on record for housing completions, 13,887 units were constructed for a population of 2.9 million people. 2015 is likely to be the 5th year in a row where less than 12,000 units are constructed for a population of 4.57 million. In Cork alone there is an annual demand for 2,500 units for a population of 520,000. In Cork on average over the last 4 years only 1,200 units per annum have been constructed, mainly one off houses in rural or semi-rural locations which do not reach the market. The demand is for between 2,500 to 3,000 units most of it in the Cork Metropolitan area.