CIF Director for Housing Hubert Fitzpatrick says the publication of the Housing Agency’s National Statement of Housing Supply and Demand 2014 and Outlook for 2015 –17 is a timely contribution to the on-going housing debate.
“The report clearly outlines the mismatch between new housing supply and housing demand, and confirms that the average new housing supply required per year for 2015 – 2017 will be circa 21,000 new units,’ he says.
“With current new house and apartment construction activity levels at circa 11,000 units annually, there is a clear requirement to increase the level of residential construction in key areas.”
According to the CIF Director the model for new residential construction that pertained from the past is not working at present.
The key issues that are curtailing new supply in key growth areas include:
- Financing: The cost of finance is still prohibitively high in some locations thus making projects unviable;
- Planning: Regulatory planning requirements including high development levies, uneconomic densities in some areas, and local authority standards that exceed the Department of the Environment Community and Local Government Standards for new residential construction can all act as deterrents to recommencement of new residential building activity;
- Adequate Mortgage Approvals: Uncertainty exists re availability of adequate mortgage approvals for new home purchasers. A purchaser will receive the same level of mortgage approval for purchasing a house in County Leitrim as he will for a house in Dublin notwithstanding the fact that house prices in Dublin could be a multiple of those pertaining in County Leitrim;
- Costs: The overall costs of construction must be reassessed. New houses and apartments in Ireland carry a VAT charge of 13.5% while in the UK, VAT is charged at Zero rate.
“While Government has listed a range of actions in its strategy for Construction 2020 to address these impediments, we must see a clear implementation plan to put these recommendations into effect,” he adds.
“We note that the ISIF has announced its €500m home-building finance joint venture with KKR, which is to be welcomed, but we now must ascertain what the cost of this funding will be, and will it be affordable in line with current house prices and all in construction costs.
“The report from the Housing Agency is a valuable tool for any house builder, financier or home purchaser in looking objectively at the housing market, and giving an independent view as to what the real need for new house building activity is.
“We need credible and reliable information to ensure that the mistakes of the past in terms of oversupply of a market does not prevail again. One thing for sure at this stage is that the industry is a long way off from oversupplying the new housing market in terms of new supply over the next couple of years.”