Policymakers and planners ignore realities of housing crisis, conference says – The Irish Times

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Policymakers continue to ignore that high construction costs are a major factor in the Republic’s housing crisis, prominent builder Michael O’Flynn said Thursday.

Addressing the Urban Land Institute Ireland (ULI) conference in Dublin, Mr O’Flynn said the state had based its policy on a “housing needs assessment which does not take into account the fact that many homes are unsustainable”.

He argued that policymakers continually failed to understand that high construction costs were a key part of the housing problem.

“When I look at the cost base today, I can understand that we cannot produce the necessary supply,” Mr O’Flynn said.

He added that the government and others had gotten “completely and utterly carried away” with the planning aspect, but were not addressing the cost issue.

Mr O’Flynn, chairman and chief executive of the O’Flynn Group, argued that the government was not dealing with the problem if it did not deal with the economics.

He pointed to the 13.5% VAT on construction and the failure of local authorities to zone enough land where it is needed for housing among the costs that have inhibited the construction of new homes.

“I’m saying here today that you have a problem and you don’t deal with it,” he said.

Subsidy scheme

Mr O’Flynn also criticized the government’s new €450m Croí Cónaithe flats subsidy scheme for forcing builders to finance projects without knowing the final value of sales.

The government must accept that there is a housing “emergency” and not a housing crisis, CBRE’s Alexandra Sheeran told the conference.

Ms. Sheeran said more than half of the 250 professionals, 70% of whom were under 40, surveyed by ULI’s Young Leaders Panel rented or lived with their parents.

She told the rally that most earn more than €80,000 a year working in finance, real estate, the professions, technology or construction.

Most of those who did not own their homes cited rising prices or mortgage rules as the main obstacle.

The problems for tenants are further compounded by the fact that they pay 20-40% on housing, while those with mortgages pay a maximum of 30%.

Those who did not own their homes preferred apartments in or near city centers to traditional suburban homes, Ms Sheeran said.

“Their preference is for a well-priced, decently sized urban setting,” she added.

Hibernia Reit’s Adrian Byrne – whose managing director Kevin Nowlan chairs ULI – pointed out at the event that mortgage rules meant most buyers couldn’t afford apartments, even if these were best suited to their needs.

Apartments cost up to €450,000 each to build, while lending rules limit buyers between €300,000 and €350,000.

He said closing the gap would require allowing house hunters to borrow more, reducing construction costs or subsidizing buyers.

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