Construction of new homes still a major cause for concern

Commenting on the CSO Residential Property Price Index for March, IPAV, the Institute of Professional Auctioneers and Valuers, said the continuing slowing in the rate of increase denotes some realism returning to the market following a period of exuberant growth.

Pat Davitt, IPAV’s Chief Executive noted however that prices in areas of the country such as the mid-West are still below a price that would induce builders to build.

“Prices in many areas of the country are still below the cost of building. Over 82 percent of the houses purchased according to today’s report are existing dwellings, pointing to the difficulty with building new homes,” Pat Davitt, IPAV’s Chief Executive, remarked.

And he said even if prices in the regions were to rise to a level close to the cost of building there is still an issue with building finance.

“While Dublin is awash with international funds keen to build to rent and enjoy extremely favourable tax treatment, finance at reasonable rates of interest is still difficult if not impossible to get for SME builders wishing to build.

“The Home Building Finance Ireland €750 million fund first announced in October 2017 was intended to target the SME building sector but it’s still very unclear where it’s at or what interest rates will be applicable to its loans, when and if they emerge, as transactions in the market are still abnormally low,” Mr. Davitt continued.

The Chief Executive has warned that Ireland should not slide into a rental model of housing over home ownership simply because international funds have the firepower to buy up developments.

“While some such funds are needed Ireland needs to take note of the disquiet excessive use of such funds are engendering in places like Berlin and elsewhere,” Mr. Davitt concluded.

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