Irish construction experts propose government intervention amidst housing concerns
The Construction Industry Federation (CIF) has proposed a scheme to the Irish government which would involve the construction of 10,000 more housing units per year in a bid to meet demand, stimulate the economy, and decrease unemployment levels. Currently, only 11,000 homes are being built a year in Ireland, dwarfing the 25,000 required, stated the ESRI; however, CIF maintains that the construction sector needs &lsquo;a supportive regulatory and policy environment from our Government&rsquo; outlined in the forthcoming October Budget before any action can be taken.
If 10,000 more housing units are built per year, an additional 25,000 people will be employed in the construction sector, according to the Construction Industry Federation [CIF].

This would also restore residential construction activity to levels needed to meet the growing high levels of demand. The CIF have proposed six steps for inclusion in October’s Budget, aimed at increasing levels of house building as well as stimulating further recovery in the economy:

Introduce a ‘Help to Buy Scheme’ to assist first-time home buyers;

Introduce a tax incentivised savings scheme for future purchasers of new homes;

Replace Part V, social housing obligations for new developments, with a 1 per cent levy on sales of all residential units;

Introduce a temporary VAT rate of 9 per cent for residential construction for a two-year period;

Restore a 100 per cent tax deduction on the interest expense incurred on loans to investors in residential property;

Reduce Capital Gains tax to 20 per cent

It is widely acknowledged that the house building industry must increase drastically the current levels of house building. The ESRI estimates that 25,000 units must be built every year in order to meet demand. At the moment Ireland is only building in the region of 11,000 per year. Shortage of new housing is a key factor contributing to house price inflation and rental inflation, due to the construction industry not being in a position to fund recovery of construction activity to the required levels.

Speaking about the plan, Tom Parlon, director general of the CIF, said: “As both the economy and the construction sector recover, these are the key challenges that must be addressed in order to maintain growth in the economy. The provision of homes requires input from our industry first and foremost to construct enough houses to meet the demand. This can only be achieved however with a supportive regulatory and policy environment from our Government.

“In demographic terms, population growth is predicted to reach 600,000 between now and 2031, 60 per cent of which will need to be accommodated in the greater Dublin area. Ireland needs buildings and infrastructure to support its economic growth, support continued foreign direct investment, and maintain the country’s economic competitiveness in stimulating further growth.

“We must look in detail at the impediments that are affecting recovery of construction activity and the ability of builders to build, the ability of purchasers to purchase, and the ability of renters to rent. We need a sustainable solution to the current impasse where construction activity, particularly in the greater urban centres, is less than half of the level of activity that is warranted as we speak.”

Some of the other proposals in the pre-Budget submission are heavily focused on the Public Capital programme, and on stimulating interest in construction careers and education.