New Homes: Getting the figures right on level of new builds
Getting the small builders back into building profitably is one factor that would help Ireland deliver on the nation’s new housing targets.
The new year has revealed something that anyone directly involved in the property sector already knew by the middle of 2024: that the Government’s repeated assertion that 40,000 homes would be built was based on fantasy and/or hope.
Putting aside any accusations of the FF/FG party hoodwinking the public in advance of last December’s elections, the new Government seems to be doubling down on efforts to tackle the housing crisis and there are a number of positives to be acknowledged, with a realistic hope of an increase in housing output in 2025.
In a recent contribution to this publication, Paul Hannon, director at Sherry Fitzgerald New Homes, said that “whilst there are differences as to probable solutions (to the country’s housing needs), at least the right questions are now being asked around targets, infrastructure, land supply and funding/costs.”
“The figures for last year appear to have taken a lot of people by surprise, but I don’t know if they really have or not.” So says Pat Davitt, CEO of IPAV (Institute of Professional Auctioneers and Valuers). Back in January, Pat had publicly reasoned that the final tally of new homes for 2024 would be closer to 27,000 than the far more ambitious Government figure of 50,000 new homes.
The final tally of 30,300 proved that his suspicions were right. Moreover, only a third of those came to private market, with the others being acquired by approved housing bodies and other Government institutions.
“Even at that point one year ago, it was clear that there were some properties that had been held over from the Covid time had been added into the figures of 2023,” says Pat.
“As for 2025, it will involve a series of little measures that will hopefully add up… there’s not going to be a key factor or item that they can bring in that can change this immediately. It’s going to take a series of factors to happen before the figures can start mounting up.”
Getting the small builders back into building profitably is one such factor, he says, adding that it’s vitally important to encourage the small-time builders to engage because together, they represent a huge volume of construction.
“At the end of the day, you can’t expect all the big builders to build all the houses that we need to build. I don’t think it’s possible unless we can get all the smaller builders in to work again.”
Lower loan rates for builders are important, he says. With better financial incentives encouraging more smaller builders, it has a snowball effect, enticing them to continue investing in future projects.
“A target of 35,000 new homes being built in 2025 seems to be where we’re at,” says Pat. “If we build more houses than that, then that’s a plus.”
Much has been made of the Government flying kites around giving builders tax incentives and breaks to get building. What is a little bit scary about that is that it echoes with some of the over-arching incentives that helped inflate the property bubble of the Celtic Tiger era.
The fact is, however, that private investment needs to be part of the picture in increasing the rate of house production.
Without incentives of some kind, it’s difficult to see how builders can be motivated to build. Moreover, one can argue that tax breaks for builders have already been introduced in the form of the waiving of water connection fees last year — something that encouraged a spike in house building.
