Gilmore has a go at ‘rip-off’ developers

LABOUR Party spokesman on the environment, Eamon Gilmore, has hit out at the rip-off profits being made on housing development by a clique of speculators.

His party will put a Bill before the Dáil this Autumn proposing to cap the price of land for house building.

In 10 years the average house price index has shot up from 104 to 319 while over the same period the inflation rate index has gone up from 106 to 142.

It is clear that in the case of house prices “the cost of land is the key factor here and ultimately it is the house buyer who pays for this.”

Mr Gilmore made his comments after the publication of dramatic findings in a new survey showing that property developers in the north side of Dublin have creamed off about 300 million in the Fingal area in excess profits alone last year.

Consultant Jerome Casey editor of the Building Industry Bulletin survey found that site costs account for 42.5% of a house nationwide. In Dublin that increases to 50%. Overall the Irish figures are grossly out of line with the rest of the developed world.

In the US land accounts for 20% of the total cost of a house. In Denmark the figure is similar while in Portugal the land factor drops to 15%.

It is similar for the rest of Europe. Mr Casey estimated that the 30% differential between land prices for houses in Ireland accounted for about 6.6 billion of the total new and second hand housing market, estimated to be worth 22bn last year.

By applying the 30% margin on the cost of land Mr Casey said the amount of surplus profit by the key landowners was estimated at €300 million. In his report Mr Casey said the major issue was that just 25 individuals or companies control more than half of the housing development land in the Fingal area. That includes Balbriggan, Lusk, Donabate and other well know areas targeted for development on Dublin’s expanding north side.

Some key players in that area of the housing market include such prominent names as Bovale Developments; Digby Holdings and Swords Demesne. Meanwhile Mr Gilmore said the Labour Party was proceeding with its Bill that would cap the cost of development land.

“Precedent exists in the Kenny Report published 30 years ago which said housing land should be based on the price of agricultural land plus 25%.”

But Mr Gilmore said his party was “flexible” on what the cap ought to be.

Progressive Democrat, Tom Parlon, Minister of State at the office of Public Works, is opposed such a cap, he said.