“The economy is ok, except for construction.” Dominic Doheny is speaking about the midlands, the line stretching from Cavan, through Athlone and Tullamore and down to Tipperary. Less than 90 minutes from Dublin but a world away when it comes to building houses.
The former Chairman of the Irish Home Builders Association and current CIF Senior Vice President, who is based in Tullamore, says most people kept their jobs in the area but construction suffered a disproportionate amount of job losses.
“The upshot is that people tightened their belts, even the people with jobs,” he says. “Like most other Irish towns we’ve a problem with the town centre, the life is getting sucked out of it.”
There are no three-beds semis for sale in Tullamore, he says. The reason is simple: “The current market value for a three-bed semi here is €140,000 and climbing slowly. At the lowest it was probably just over €100k so we’re going in the right direction but for a sustainable market in the town the price needs to be over €200k.
“I can’t see any developer being interested in re-entering the market in any other circumstances.”
Dominic says that €60k gap will take years to close. “Even though the demand is there and the 18 months it will take to build new stock gives the market time to experience more price increases, the risk is still too big.”
Like many developers working outside Dublin he says there is a massive problem coming down the tracks. Dominic cites investors exiting the rental market as further exacerbating the problems.
“In the 25 years prior to the crash there was never a time when it didn’t make sense to build houses. Now there is nothing getting built, zero houses over the past seven years and I don’t think anything will change over the next two years. That’s almost a decade without any house construction in Tullamore.”
A healthy market in the area would create 100 new homes per year, he says. There has to be a mix of hosing on offer – two, three and four-beds – “we couldn’t sell a development of just four-bed detached”.
On the issue of affordability Dominic raises the point that a former stalwart of the market, the single teacher, cannot now afford a mortgage. “A new teacher’s starting salary is under €30k. How long do they have to work before they reach a pay scale that will support a mortgage?”
That market is now gone, as well as nurses and gardai.
Another issue is the new building control regulations have made it more difficult for owners wishing to move. “They want to sell a house that was built during the older regulations and move to a new home. The new regulations have added so much to the cost of a home that’s probably a difference of €20k they have to bridge.”
The full interview with Dominic is published in the June/July issue of Construction magazine