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PARLON DISCUSSES LATEST ESRI REPORT
By Ruth Baily
The latest ESRI report stating we need 90,000 new homes across the country tallies confirms what others have been saying for the last 2 years. That’s according to CIF Director General Tom Parlon who was speaking on RTE Morning Ireland.
Mr Parlon also said that the report may have, “underestimated demand around the country.”
When referring to Dublin Mr Parlon said,
“We’ve being saying for a long time that this was going to be a two stage recovery, in Dublin there was massive publicity about the over supply, that was always exaggerated and this has now dried up entirely. Builders build houses because there is a demand and people choose to live in them. At the moment there appears to be demand but the builders haven’t got the where with all to build. The cost of building is very substantial and while house prices are increasing now they did decrease by up to 60%.
“Where is the viability of building a house when you take all the massive costs into account, if you take a €250,000 house which is modest enough even by today’s standard, €2,500 goes in stamp duty, €5,000 to Part V, generally €6,000 for local development levies and €33,750 in VAT, so all in all about €100,000 goes to the Government by one means or another”.
Mr Parlon also suggested the Government “had the scope to reduce some of the levies to kick start building”, and that development levies could be looked at and Part V could be replaced “by a 1% levy on all houses so as not to have an overloading on new houses. Development levies are still based on the Celtic Tiger when prices were double what they are now”.
While Mr Parlon reiterated the CIF’s welcome for the Government’s ‘Construction 2020’ initiative he noted that the “75 action points in ‘Construction 2020’ need to be delivered on”.
He said that the CIF “was disappointed with the level of enthusiasm of new Ministers in their positions, we can’t get a meeting until after the 1st of September and I would have expected more urgency. We need to move on this very quickly”.
He added, “The biggest single impediment at the moment is the lack of finance. Banks are generally giving 50% to 60% and unfortunately builders do not have the cash available and this was acknowledged by the Government in ‘Construction 2020’.” Mr Parlon said the fact that the Strategic Investment Bank, which was discussed before the end of the Dail session but was not signed into law was disappointing. “We need a third source of funding”, he continued.
Mr Parlon concluded by saying, “building houses is a no brainer, prices are up, there is massive demand but the lack of capital is a major constraint”.