The barriers to house building will have to be addressed if 80,000 housing units are going to be built in urban areas over the next five years.
That’s according to the Construction Industry Federation (CIF) following the publication of a new report from the Housing Agency.
The Housing Agency has claimed that 79,660 houses and apartments will need to be built in urban locations between now and 2018 based on population growth and migration. They predict the need for new housing in these urban areas will grow from 9,526 units this year to 20,853 in 2018.
However the CIF believes that these targets will not be met unless the Government and other groups address the many barriers to house building that exist in the current market.
“We welcome the publication of this report by the Housing Agency as it once again illustrates that we need to start building more housing in this country,” said CIF Director General Tom Parlon. “Unfortunately the requirements set out in the report will not be met until the barriers to house building are tackled.
“In the Housing Agency report they outline that 5,663 new housing units will be required in the Dublin region this year. That simply won’t happen. The maximum number of new units we can expect to see built in Dublin this year is approximately 2,000 units. House builders want to build but unfortunately the current market conditions are stopping that from happening.
“The cost of house building is still at too high a level. That is because the various taxes and levies have barely been altered since the downturn and do not reflect the current market reality. The cost of the Part V levy for social and affordable housing can add anything from €6k – €30k per housing unit, depending on location. Development levies can also add thousands to each unit that is being built.
“Even when these cost issues can be addressed there are also other problems facing the industry. Access to finance is a major problem. The banks have been demanding unrealistic equity of 50 – 60% for any projects. After six years of decline in the industry any construction companies that are still going do not have access to that kind of capital.
“Planning is also a problem. There is planning permission for 30,000 housing units in Dublin at the moment but 21,000 of those are for apartments and some of the remaining 9,000 houses are tied to apartment developments. Unfortunately the market does not want apartments at the moment. So if a builder would like to change that planning permission from an apartment complex to houses they will need to reapply for permission. That can be a long drawn out process, with no guarantee they will be successful.
“We need urgent action to address these issues and the other barriers that exist to house building. The supply of housing will not be fixed overnight. It can take 18 months or longer to get housing developments built – between seeking planning permission and carrying out the construction. So even if all these issues were addressed right now it will take time for the market to start providing the sustainable level of housing that is required.
“The Government will shortly be bringing forward a strategy document to encourage house building and to help create construction jobs. That strategy needs to tackle the barriers we have highlighted. That will require action by them and other groups such as the banks and local authorities. If action is not taken soon then the industry will not come close to meeting the figures outlined in the Housing Agency’s report,” Mr. Parlon concluded.