Barriers to new builds must be lifted, says CIF

The Construction Industry Federation has given broad approval to Government plans to energise house building, but says major barriers to construction must be removed in order to revitalise the industry.

CIF director general Tom Parlon also welcomed a rise in mortgage draw-downs, but said banks’ insistence that builders provide at least half of the development funding was delaying a much-needed rise in home construction.

Almost 80,000 homes will need to be built in urban areas over the next five years to meet growing population demands, according to the latest report from the Housing Agency.

Around half, or 37,581 units, will be required in the Dublin region, with an immediate need for 5,663 units this year. Annual demand in the capital will rise to 8,970 by 2018.

Cork will need an average of 1,469 units per year to support the population of its city and suburban areas between now and 2018. Galway and Limerick will experience housing shortages from 2015 onwards, with a total of 2,316 new houses needed in Galway, and 2,635 in Limerick, by 2018.

Government plans to ease the burden on buyers by guaranteeing a proportion of first-time mortgages will not be enough to restart the industry, according to the CIF.

“While access to more mortgage funding could provide an extra source of finance to allow house building projects to proceed, the Government also needs to tackle some of the other barriers to construction,” said Mr Parlon.

“One of the main problems is access to development finance. While AIB and Bank of Ireland have recently announced their intention to provide development finance for sustainable housing projects, they are still requiring the builder to provide equity of 50%-60%.

“This is not feasible for many construction companies. They are not in financially strong positions following the six-year decline in the construction industry, which has seen activity diminish and reduced the level of revenue being provided to these companies.”