The housing crisis is “deepening before our eyes” and it will require a whole of Government approach with urgent action from the new Government, according to the Institute of Professional Auctioneers and Valuers (IPAV ).
Pat Davitt, IPAV chief executive, said: “The cancellation by Dublin City Council of its €20 million tender for modular housing due to insufficient applications is just the second signal this week of the deepening crisis. It follows rapidly in the footsteps of news from BPFI, the Banking and Payments Federation Ireland, which revealed that in the three months to January 2016 the number of mortgages approved fell by 15 per cent year on year.”
Davitt says the cost of finance is one of the main impediments for builders, particular smaller builders and the crisis in building is of such a magnitude that new Government will need to introduce some form of Government finance that could be paid back once homes are sold. “The private sector needs to be at the core of a house building programme,” he said. “If we are waiting for the State to act we will, unfortunately, be left waiting, there are just too many impediments and too much red tape.”
Mr Davitt says some builders are being quoted interest rates as high as 20 per cent, something he says is “a prohibitive figure for most builders.” He says pillar banks tend to lend for building where they deem the risk to be very low, generally to major operators with good collateral, and warns that the housing crisis will not be solved without the involvement of the smaller builders.
“At the end of the day whatever costs are incurred will be borne by home buyers,” he said. “If the price of funding is at 20 per cent this would make for very expensive homes, apart from it being an untenable proposition for most builders.”
IPAV has also called for the Development Contribution Rebate scheme, intended to boost house construction by returning between 80 per cent and 100 per cent rebate on development levies paid, to expand the number of areas of operation beyond Dublin and Cork. The organisation is calling for the scheme to include developments of less than 50 units, making it available to all builders rather than just the large ones.