Noonan urges banks to up loans for developers

The finance minister has called on banks to provide more equity to developers to help tackle a housing crisis in Dublin and beyond.

Michael Noonan was responding to comments made by Alan Aherne — economist and former adviser to the late minister for finance, Brian Lenihan — who said that the Government must put pressure on banks to lend to developers.

Mr Aherne also called for an integrated government plan to combat house prices spiralling out of control again.

Mr Noonan, speaking at the announcement of 30 jobs at Kirby Engineering Group in Limerick, said: “The Government has a plan. There was a plan for the construction industry published before the summer and there were 72 specific proposals in it.

“Alan Aherne is a very good economist; he’s from Limerick and I know him well, but he was adviser to Brain Lenihan when he was finance minister. We’d have very similar ideas, and, what he says we should be doing — we are actually doing.”

“They’re [banks] lending, they’re lending now. I mean, the point [Mr Aherne] is making is that most of the builders went bust... Nama is now providing part of the equity [to builders], but we would like the banks to provide some equity as well — that’s where the flaw is, but it’s mending itself,” Mr Noonan added.

Referring to people camping out in recent days at the opening of a new housing development in Swords, Co Dublin, Mr Noonan said buyers should not panic: “You’ve seen that thing in Swords, with a couple of people queuing and 60 houses being built... but that [development] is zoned for 1,500 houses, and there is planning permission for around 430 [homes].”

Addressing the budget, Mr Noonan said people could be “hopeful” that it would not be as austere as recent years.

“I can give them the hope, that the expectation that we’d have to take another €2bn in cutting expenditure and raising taxes — that’s moving off the agenda.

“We won’t have to do a lot now because we got a lot of extra taxes in. But, if we have any tax relief, it will have to be paid for elsewhere in the system.”

He also remarked that Ireland could not rely solely on direct foreign investment to rescue the country. He said indigenous companies in the tourism and hotels and agriculture sectors, which he said had seen improvements, were the key to re-energising the economy.

He added: “You go on through the different sectors [and] construction is picking up again; retail is picking up again; So, anybody who thinks that the IDA, on their own with foreign direct investment, is going to rescue the country — no. But, [FDI] is a great lead and a lot of other things can be built in the industries that we are also very good at.”