Gannon Homes blames mortgage rules for 50% drop in house sales

One of the country’s best known housebuilders, Gannon Homes, has claimed that the new Central Bank rules on mortgage lending have been the main factor behind the firm sustaining a 50% drop in house sales this year.

During the housing boom and bust, the firm’s owner, Gerry Gannon, was one of the best known developers and his firms owed €214m to banks here on the night of the Government’s bank guarantee in 2008.

However, Mr Gannon’s Dublin-based firm made a strong comeback in the housing market last year with revenues increasing almost eight-fold from €5.67m to €43.8m.

Accounts just lodged with the Companies Office show that Gannon Homes Ltd was able to record pre-tax profits of €4.4m on the back of its 2014 revenues.

A spokesman for the firm said yesterday that the company last year sold between 180 and 200 new homes, adding that house sales by the firm this year will be 50% of that.

He said: “We haven’t increased pricing. Nothing has changed in the ingredients apart from the introduction of the Central Bank rules requiring new buyers of houses valued over €220,000 to have a 20% deposit.

"There is no question but that the mortgage rules have resulted in the drop in sales because house buyers are having difficulties getting the 20% deposits.”

Gannon Homes plans to sell between 400 and 450 homes next year, but warned that this can only be achieved if the Central Bank amends its mortgage criteria to halve the deposit requirement to 10%.