Housing costs - Government policy makes crisis worse

Interminably, the question of who, or what, is responsible for the unconscionable cost of houses in this country is one that is passed from the Government, to builders, to the cost of land, but ultimately the purchaser pays an exorbitant price.

Despite the fact that the Government insists it is in favour of people being able to afford their own houses, its own policy is one of the costly contributing factors in preventing too many people from doing just that.

A breakdown in the cost of houses carried out by the Irish Home Builders Association (IHBA) illustrates that a huge element in finding the finance for one is demanded by the prohibitive level of the Government’s take.

Last year, the total revenue to the Exchequer from new homes was a massive €5.7 billion, which accounted for 17% of the entire tax-take from all sources for the year. VAT of itself, at a rate of 13.5%, accounted for €1.3 billion.

To put it another way, VAT forced purchasers to pay a ridiculous €26,700 for the privilege of buying their own homes, simply because the Government demands it.

It is not, of course, the only source of inflated extraction, and the building industry itself, as well as landowners, contribute to the inflated cost of putting roofs over people’s heads.

Meanwhile, the Government maintains it could reduce VAT to a more realistic level, but is not happy that saving would be passed onto the consumer.