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The Construction Industry Federation (CIF) welcomed housing measures in today’s budget but warned that increased infrastructure investment is required to transform new housing estates into vibrant communities over the next decade.
CIF Director General, Tom Parlon said: “The measures introduced today are a significant step towards solving the housing crisis by addressing the chronic lack of supply in new builds. In terms of resolving the housing crisis, the CIF’s Irish Home Builders Association welcomes the introduction of this tax rebate scheme aimed at helping first-time buyers to save deposits for starter homes. There is an acute shortage of activity in this sector because first-time buyers cannot secure mortgages. As a result, banks won’t provide finance to home-builders making the building of new starter homes unviable.
This measure aims to stimulate some supply in this demographic to target realisable demand i.e. first-time buyers that can afford a mortgage and starter home but are currently renting and trying to save for a deposit. The Central Bank’s Loan to Income rules will continue to ensure that first-time buyers can only access affordable mortgages and dampen significant increases in prices as a result of the measure.
The CIF also welcomes the extension of the Home Renovation Incentive scheme. This has been a highly successful scheme for those seeking to increase their house size and to upgrade their homes.
In addition, the Minister’s commitment to reintroduce interest relief for landlords to 80% this year and up to 100% over the next five years is to be welcomed. These measures taken in conjunction with initiatives in Minister Coveney’s ‘Rebuilding Ireland’ strategy can resolve Ireland’s housing supply issues in a measured and sustainable way.
The significant amount of capital expenditure on social housing announced by Minister Donohoe is also welcomed and it can lead to a significant increase in units available. Another key initiative of Ministers Coveney and Donohoe in this regard is the local infrastructure fund that will see €50 million made available to make ready land capable of supporting significant housebuilding activity and will make a major contribution.
However, today, we are predicting that the low level of infrastructure investment across our economy will be the next crisis Ireland faces. Nearly a decade of low level investment in infrastructure now risks economic growth and confines regions outside the Greater Dublin Area to permanent lower growth levels.
Without significant infrastructure investment, people will continue to migrate to Dublin and today’s budgetary measures may only deliver housing into areas that are economically depleted.
National infrastructure, like the M20 connecting Cork to Limerick, could bring economic recovery to key regions and struggling rural communities. The M20 project is estimated to cost €800 million and the Government’s original analysis showed the economics benefits would outweigh costs by a factor of 2 to 1. This could counter-balance and compliment Dublin’s economic primacy, currently accounting for 40% GDP.
Unfortunately, Ireland has one of the lowest levels of infrastructure investment in the EU, and successive bodies such as the European Commission, the OECD, the National Competitiveness Council, and several industry representative bodies have all called for an increase in infrastructure spend. Prior to the recession the long-term average for capital expenditure was approximately 5% of GDP. This is at a time when funding is at historically low levels and we could deliver national infrastructure more cheaply than at any other time in our history. We are allowing ourselves to be curtailed by EU fiscal rules that are wholly unsuitable for country emerging from a recession with a growing population and economy. The Government must continue to press our case with the EU to facilitate this investment. The pay-off for the exchequer is evident as every €1billion invested in infrastructure generates 10,000 jobs.
The CIF also welcomes measures in the budget that focus on supporting the self-employed. The construction industry has approximately 45,000 self-employed involved in the sector. The increase in the earned income tax credit to €950 available to the self-employed can help the huge number of construction micro-enterprises to build sustainable businesses.”
Full details of the CIF budget submission are available on our website, or by clicking here