CIF: Incentives not enough

The Construction Industry Federation has warned that the low level of housing supply will continue because of the lack of measures to address the issue in yesterday’s budget.

It has also said the attempt to incentivise first-time buyers onto the property market will have “little or no effect”.

CIF said that it welcomed yesterday’s abolition of the windfall tax, adding that the move should bring more development land onto the market.

However, the federation’s director general, Tom Parlon, said: “The budget does nothing to stimulate private house-building activity. We have a demand for up to 25,000 housing units annually, but the budget addresses the housing needs for up to 2,500 persons on the social housing waiting lists.”

Michael Noonan yesterday announced that, in order to support first-time buyers, he was introducing a refund for Deposit Interest Retention Tax on savings used to purchase a property. He said the refund would apply until the end of 2017 in respect of savings up to a maximum of 20% of the purchase price.

Tom Parlon said the measure will have little or no effect. “You are talking about a saving of approximately €40 per annum for €5,000 saved,” he said. “Savings need to be more incentivised so that the required deposits can be put together.”

On a more positive note, CIF said the announcement of an increase in capital spending marked “a turning of the public spending tide for the construction sector”.

The Government announced the provision of €2.2bn for social housing over the next three years, including €1.5bn coming directly from the Exchequer. The overall capital spending budget will also increase for the first time since the austerity budgets began, with additional funding for schools also announced.

“The increase in capital spending is very important to the construction industry,” said Mr Parlon. “You have to understand that previously public spending represented about 50% of the activity in the sector. So the massive cuts in capital spending really hit the industry hard and added significantly to the increase in construction job losses.

“The funding that has been provided for social housing is deeply significant. It will provide a huge amount of work and that will create thousands of jobs.”

However,, CIF welcomed the extension of the Home Renovation Incentive to rental properties. It said the scheme had been very successful in getting work for legitimate contractors rather than losing it to black market operators.