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Who’ll build all the houses that we need?

February 23rd, 2020 5:05 PM

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DURING the general election campaign, the political parties tried to outdo one another with the numbers of social and affordable houses they promised to have built in order to make urgent inroads on the housing shortage. Parties will promise anything in the auction politics bidding that precedes an election if they feel it can help them get over the line.

Sinn Féin promised the greatest number of social and affordable housing units, even though there were doubts that they could be provided for the amount of money they were allocating for it. However, it had the desired effect of winning them the greatest number of first preference votes in the country in the general election.

Politicians’ promises – especially those made in the heat of election battle – are rarely  delivered on in full and, in the case of housing, badly and all as so much more of it is needed, there will be major difficulties in trying to reach such ambitious targets. That said, it should not stop whoever ends up in government from striving to achieve them.

The Irish Homebuilders Association (IHBA) says it will not be able to play its part in solving the housing crisis unless a specific set of challenges is tackled, adding that it’s vital that whoever forms the next government understands the challenges of housing. Barriers to increasing construction include costs, affordability, increasing regulations and planning guidelines, which the IHBA’s James Benson blames for the low level of output.

The 21,000 homes built in Ireland last year comes nowhere near what is required to reduce the shortfall. Half as much more again is the annual figure needed to make significant inroads – and this over the course of a decade to catch up with demand.

Along with the Construction Industry Federation (CIF), the IHBA has been staging a series of roadshows nationwide, aimed at new TDs and local politicians to explain to them the blockages in the system and what needs to be done to address them so that the pace of construction can be stepped up towards the required level.

In relation to private housing, the IHBA maintains that the key challenge facing the industry is the fact that young people can’t secure mortgages. Many would-be buyers have been forced into ‘rental purgatory,’ giving them little prospect of saving for a deposit due to tighter Central Bank fiscal policies.

With fewer couples that are able to buy a home, banks are limited in lending to home-builders, so they can’t build and the supply remains low. However, nobody wants the country to go back to the Celtic Tiger days of reckless lending by the banks, which resulted in their having to be bailed out by the Irish taxpayer, so any loosening of the purse strings in this regard would have to be done with extreme caution.

As well as that, the IHBA says the cost of construction is too high due to the government tax take on every home built. And, because of climate concerns, better quality and more energy efficient homes are required, with additional regulation making homebuilding even more expensive and, as a result, this is impacting on supply.

This has meant higher prices in Dublin and little or no homebuilding outside the capital. That is something that will have to be addressed by whoever takes over as Minister for Housing.

Chairman of the IHBA, Neil Durkan, has suggested a shared equity scheme whereby the government takes an equity stake in new homes with the first-time buyer effectively repaying the loan over a defined term in order to assist the first-time buyers to get on the property ladder. This, he feels, will help buyers to bridge the gap between the restricted lending terms a bank can offer and the difficulties buyers are having saving a deposit.

As regards building social and affordable housing on lands owned by the State or its agencies, this does not happen overnight either. Zoning has to be right for housing, planning permission needs to be secured and there is potential for objections to such developments.

Then there is a tendering process to procure builders. However, finding builders to take on such work has proven difficult because the industry is facing a skills shortage due to so many construction workers either emigrating or changing career paths in the wake of the collapse of the building boom at the end of the ‘noughties,’ allied with a gap of a few years afterwards in taking on apprentices.

This will be the biggest stumbling block in practical terms and a difficult one to deal with for the incoming government – if we ever get to have one!

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