Housing crisis “deepening before our eyes” say Auctioneers
The housing crisis is “deepening before our eyes” and it will require a whole of Government approach with urgent action from the new Government, IPAV, the Institute of Professional Auctioneers & Valuers which represents 1,000 auctioneers said this morning.
Pat Davitt, the organisation’s 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% year on year. With a figure for 2015 of just €4.9 billion loaned representing 27,234 mortgages with first time buyers accounting for only half. The €4.9 billion includes a figure for mortgage switching which has grown by a whopping 183pc in a full year. “
He said 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 a new Government will need to introduce some form of Government finance immediately it is formed. If the Government introduced such a scheme it could reduce the end house cost for first time buyers by as much as €25,000.
“The private sector needs to be at the core of a house building programme. 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 said some builders are being quoted interest rates as high as 20pc, “a prohibitive figure for most builders”.
He said the pillar banks tend to lend for building where they deem the risk to be very low, generally the major operators with good collateral. But the housing crisis will not be solved without the involvement of the smaller builders.
“At the end of the day whatever interest costs are incurred will be borne by house buyers If the price of funding is at 20pc this would make for very expensive homes, apart from it being an untenable proposition for most builders,” he said.
IPAV has also called for the Development Contribution Rebate scheme, intended to boost house construction by returning subject to certain conditions, between 80pc and 100pc rebate on development levies paid, to be expanded to include areas of operation beyond Dublin and Cork and for the scheme to include developments of less than 50 units, and for the scheme to be open to all builders rather than just the large ones. This would prevent the kind of acute shortages in Dublin and Cork reaching regional centres in the next 18 months.