House prices will continue to rise until supply improves dramatically, the Institute of Professional Auctioneers & Valuers has stated.
Pat Davitt, IPAV’s chief executive, says that while cranes have returned to the skies, particularly in Dublin and other urban centres, they are primarily engaged in commercial rather than residential construction.
“There are only a few large operators building residential in Dublin City," he said. "This lack of competition is fuelling price growth and also dictating a tendency to build in areas that can command higher prices. The really big impediments to residential construction remain unresolved, unfortunately."
Mr Davitt has identified these impediments as: a lack of State knowledge of the cost of construction; the inability of smaller builders and developers to access finance and at reasonable interest rates; a lack of competition in the lending market; restrictive mortgage lending rules; the post-crash risk-averse attitude among lenders towards buyers.
Mr Davitt said it is a "disgrace" that there are no reliable figures as to the number of homes built last year. He said the State and anyone interested in the development of a sustainable property market “needs to know whether or not land hoarding, for the express purpose of keeping house prices inflated, is a factor in the market”.
He said studies from both the Irish Home Builders Association (IHBA ) and the Society of Chartered Surveyors of Ireland (SCSI ) found the cost of building a typical three-bed house, excluding land acquisition and VAT, to be of the order of €197,000. Mr Davitt says IPAV suspects the real cost could be much lower, probably around €140,000.
Pointing to a recent study by Irida Consulting, he said that concrete products used in building this type of home account for less than 5 per cent of the total build costs. "We need to know the precise breakdown of the other 95 per cent of costs,” he said.
IPAV has called on the Government to fast-track the promised analysis of building input costs promised in the ‘Rebuilding Ireland’ housing strategy.
The institute has also urged the Government to set up a special price-controlled Builders Fund with interest rates akin to those of the special hardship cashflow loan scheme for farmers, of just 2.9 per cent across six years, through the Strategic Banking Corporation of Ireland.