Mortgage rules hit recovery, says Construction Industry Federation

Tom Parlon

The construction sector in Ireland has the potential to double in size and create 25,000 extra jobs in the next few years, according to the Construction Industry Federation (CIF).

However, high Vat rates, restrictive Central Bank rules on mortgages and a slow start to some of the projects outlined in the Government’s latest public capital programme are having negative effects, the CIF’s annual conference heard yesterday.

Speaking at the conference being held in Croke Park, the CIF’s director general, Tom Parlon, called on the Government to prioritise the industry in the budget and ensure that the gains made in construction are sustained.

“The construction industry was on life-support for over six years and now all the vital signs are going in the right direction,” said Mr Parlon, who noted that 45% of all jobs created last year were in the sector.

Mortgage rules hit recovery, says Construction Industry Federation

“Activity levels are up and the value of construction output rose to €11bn in 2014 — a rise of over 14%. Government expenditure on capital investment is up, albeit still only about one-third of what was spent in 2008.

“Planning permission figures are up for residential projects and the ongoing growth in foreign direct investment is helping to sustain high levels of commercial construction activity among building firms all over Ireland.”

However, Mr Parlon said the ability of the construction industry to double in size in the coming years depends on the right decisions being made by Government and all stakeholders.

“The sector represents about 6.7% of GNP activity in 2014 and is a long way off the 12% level that most economic commentators, and the Government, believe the sector should have as its output,” Mr Parlon told the conference, which is being held in association with the law firm Maples and Calder.

While the industry is supportive of the Government’s Public Capital Programme, he said there was a realisation in the sector that many of the projects listed have moved from previous plans, while other projects are a long way from being started.

Mortgage rules hit recovery, says Construction Industry Federation

“Investment in infrastructure kept many construction firms afloat, but now the industry needs to see more ambition from the Government in terms of a concrete timeframe for the delivery of the major infrastructural projects that the country is calling out for,” said Mr Parlon.

He also hit out at new Central Bank rules on mortgage lending, saying they made it almost impossible for some first-time buyers to get on the property ladder.

“It is now clear that for some potential buyers, their rent is costing more than mortgage repayments would, yet the Central Bank rules make it impossible for them to buy,” he said. “The Government has an opportunity to review these rules as they are clearly not working.”

Dudley Solan of Maples and Calder said his firm expects further growth in construction next year, surpassing the 45% rise in 2014.

“This is evidence of the industry’s pivotal position in the wider recovery and we are looking forward to continued progress over the next year,” he said.

More on this topic

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Short-term mortgage offers attract but may cost more in long runShort-term mortgage offers attract but may cost more in long run

Mortgage approvals increase slightlyMortgage approvals increase slightly

Set aside 30% of housing developments for first-time buyers, FF saySet aside 30% of housing developments for first-time buyers, FF say


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