Nolan report finds Galway housing crisis is ‘perfect storm’

Lack of housing supply, a collapse in the construction industry, increased demand in the rented sector, and the inadequacy of social housing combine to create the “perfect storm”, according to Labour TD for Galway West Derek Nolan, who has published a report showing the unhealthy state of the housing environment in Galway.

A number of consultations with representations of those working in the housing sector were conducted between December, 2013, and February this year. This culminated in the Galway Housing Report, published by Deputy Nolan on Monday, which not only outlines the issues experienced by various housing stakeholders but also calls on the Government to put in place a plan to stimulate a supply in housing accommodation.

Commenting on the report, Deputy Nolan said: “Demand for housing is continuing to increase and will continue to do so as job numbers rise, putting further pressure on the sector. As well this, purchaser sentiment will be skewed through the perception that to delay purchasing is disadvantageous as prices continue to rise.

“The report makes a number of recommendations to Government including the need for financing sustainable development in Galway, a total overhaul of the rental supports system and the provision of more social housing units. It was also recommended that proposals such as rent control measures, the control of the price of building land and a land bank tax should be considered.

“I undertook to do this study because I thought it would be helpful to get key people in the sector together to look at the issues and come up with viable solutions. I am very grateful for the cooperation of the organisations who took part and hope that we can continue working together to address the housing issues in Galway.”

The report shows there are a number of challenges facing potential homebuyers including: Difficulty in securing a mortgage; a sense of pressure and worry that house prices are increasing at a pace that will punish those who do not purchase quickly; and a lack of supply in quality mid-market family housing.

It was found that the rental market in Galway has seen a rebound in prices over the last 18 months as market failures in other areas, combined with moderate increases in employment result in an increased demand for static number of rental properties. Some of the main problems identified are: A shortage of supply of quality rental accommodation; increased rents; an increase in landlords seeking to end tenancies on the basis of family members returning to take over those properties; evidence that receivers appointed to ‘buy to let’ properties are terminating tenancies so as to sell with vacant possession; and the large student population in Galway causes a distortion in the market.

The issues faced by those on rent allowance in Galway include: Increase in advertised properties with the stipulation ‘rent allowance not accepted’; a definite divergence between approved rent allowance limits and actual rents; an escalation of rent allowance tenants paying ‘top up’ payments to landlords; and the danger that rent supplement is becoming a support for substandard accommodation through lack of adequate inspection mechanism.

The social housing lists continue to be persistently high, with a significant increase since the recession began. Issues include: A dramatic increase in the number of people on housing waiting lists and the waiting times experienced; major problems in the provision of secure, long-term tenancies through the reliance on the private rented sector to provide solutions; a halt in the construction of local authority housing; and an increase in the number of landlords exiting RAS contracts.

Working extremely hard to tackle the problem of homelessness in the city, homeless services face problems that include: Rent supplement and top-up payments are causing difficulty in placing homeless service clients in private accommodation; and a need for greater flexibility and cooperation between statutory authorities and NGOs to provide innovative solutions in a difficult environment.

The report also identifed the challenges faced by the construction sector noting that banks are unwilling to get involved in development loans, there is a lack of customers due to a difficulty in getting mortgages, a worrying return to hoarding of land and landbanks, and current house prices are not sufficient to meet the costs of construction.

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