Why aren't more houses being built to deal with the shortage?

Bob Z

Ok this is a daft question but. .why is there a shortage of houses and a lack of houses being built at the same time?

infogiver

Bob Z wrote: »

..why is there a shortage of houses and a lack of houses being built at the same time?

The Government allocate a housing budget to each LA and between planning issues and zoning and red tape tangles and general incompetence on behalf of the LAs ( there is far too much red tape) it just doesn't get done

Donkeygonads

Also, developers will only build if they can make a sizable profit per unit , but the central banks restrictions on mortgage lending means people can only borrow a limited amount so, developers say its not worth their while .

Denny_Crane

Bob Z wrote: »

..why is there a shortage of houses and a lack of houses being built at the same time?

Probably the most non-daft question ever asked. The answer is entirely daft though.

There's no simple answer with various sides all blaming each other. While I'm sure it'll add to the accusations of me being a communist land banks need to be taxed and I can't understand why social housing can't be built by a nationalised company. I have a funny feeling houses starting to go up and landbanks costing developers money might move things along a bit.

benjamin d

Denny_Crane wrote: »

Probably the most non-daft question ever asked. The answer is entirely daft though.

There's no simple answer with various sides all blaming each other. While I'm sure it'll add to the accusations of me being a communist land banks need to be taxed and I can't understand why social housing can't be built by a nationalised company. I have a funny feeling houses starting to go up and landbanks costing developers money might move things along a bit.

Surely that's the only option left at this stage? There's so much land going to waste. Nobody with the balls to do it though.

That and allowing for proper high rise in cities will go a long way to solving the problems.

DubCount

Its catch 22. Developers cant make a profit at current prices and housing regulations. Normally, prices would rise due to the shortage of supply. However the Central Bank Rules on mortgages is restricting demand and keeping prices low. This is pushing more people into the rental market and causing rental inflation. The government is introducing new rules to curb rental inflation which will push the problem somewhere else (increase cost of renting rooms, increase in housing lists, more homeless people.......). It has got to be more economic for developers to build.

Eric Cartman

The issue with this "Central bank rules ruining things" argument is that 50% of purchases are by cash buyers at the moment.

Whatever we do, the central bank rules are actually a good thing, we shouldn't be looking for loopholes or tricks or extensions or exemptions to those. We should be figuring how to build houses profitably within those rules. The central bank rules are the only things keeping average income earners in with any sort of hope of getting a property and not crippling themselves into the ground.

the average industrial wage in Ireland is currently just over €35,000 , if we take that with the 3.5x + 1 (partner) rule for the CB and assume the partner is also on the average , we get 3.5x35,000 + 35000 = 157500 of a mortgage, which can be 90% of the property price, so we get €175,000.

So for a household of 2 people on the average industrial we have a guide of
17,500 deposit
157500 mortgage
175000 total property price.

so lets work on how do we build (profitably) a 3 bedroom semi (most popular house choice) for 175,000.

My best estimation is that taking out VAT and stamp duty for FTB's + a cut in regulations would certainly help.

The_Conductor

Construction of residential housing units *is* shooting up though- we are project to finish 18,000 units in 2017- on track to 25,000 units in 2020. Its still some ways off the 30,000 units the ESRI reckon we need to thread water- however, its heading in the right direction.

The short and simple is more houses are being built- however, we are ramping up production from as good as nothing- and a sizeable portion of our construction workers have emigrated (can't blame them really)- so we have constraints that are abnormally impacting on construction- not leastly, we simply don't have the workers we need to build them.

The CFI have held recent employment fairs in Poland, Latvia/Lithuania/Estonia and the UK- to try and persuade EU construction workers to come over here for a spell- and it seems to be working.

So- we have a shortage- which we are slowly righting- but its going to take us a while to get there.

quadrifoglio verde

One of the biggest issues is developers getting access to finance. They'll get finance for 10 houses in a 100 house development, they'll sell those 10 houses and then the bank will release more money to build 10 more.
This won't happen with apartments though as you can't build quarter of an apartment block

joeysoap

Eric Cartman wrote: »

My best estimation is that taking out VAT and stamp duty for FTB's + a cut in regulations would certainly help.

probably, but I just know that somebody will find a loophole and it will be a free for all. (How many lawn mowers were bought as cycles when the cycle to work thingy was introduced?)

And the ST had an article couple of weeks ago saying that non nationals could build a house in Eastern Europe and still claim the income tax refund on a new home. ( in fairness unlikely to be many, but the child benefit was one they didn't envisage, nor the GF agreement that allows anyone born in NI to claim Irish citizenship) I don't know what loophole taking out VAT will open, just know it will open one)

Eric Cartman

joeysoap wrote: »

probably, but I just know that somebody will find a loophole and it will be a free for all. (How many lawn mowers were bought as cycles when the cycle to work thingy was introduced?)

And the ST had an article couple of weeks ago saying that non nationals could build a house in Eastern Europe and still claim the income tax refund on a new home. ( in fairness unlikely to be many, but the child benefit was one they didn't envisage, nor the GF agreement that allows anyone born in NI to claim Irish citizenship) I don't know what loophole taking out VAT will open, just know it will open one)

sadly its the nature of Irelands cultutre of entitlement, taxes are too high and theres too much rot, so people feel like taking the piss out of a government program is alright to do. A robust interview process, rules against buying the houses to let and selling them on a leasehold basis (that becomes freehold after say 15 years) is a way around this. We need robust solutions for FTB's but checks and balances to keep investors, vultures, etc.. out.

pablo128

Im sick of hearing high rise, 80 storeys, city this and that. Bollox. We don't have any cities. Dublin is a large town centre. In the whole of Dublin is 1.2m people. Take tallaght out of it and there's less than a million. We are not that badly stuck for space that the best option is a skyscraper.

We had developers giving prices out a while back saying we can't build for less than X amount. When you looked into it the price was for a one off house in Dublin. No economy of scale or anything.

Shelflife

There's only a problem in the cities, down the country there are loads and I mean loads of empty houses.

Govt need to look a moving some of the new jobs to rural areas, 40 jobs in a rural area would be a huge boost and release some of the pressure on the city demands, multiply that by 10 and that's 400 houses freed up in the city, 400 houses filled in rural areas and a rejuvenated rural area.

Everyone wins !

Roger_007

The question posed is "Why aren't more houses being built to deal with the shortage.?"
Is there really a shortage?
Check this link to the housing agency discussion paper:-

https://www.housingagency.ie/getattachment/Our-Publications/Latest-Publications/16-05-17-Vacant-Homes-Paper-Housing-Agency.pdf.

According to the above paper, there are 230,000 empty housing units in the state. There are 24,000 empty housing units in Dublin alone. These figures exclude holiday homes.

Why do people think there is a housing shortage?

Eric Cartman

Shelflife wrote: »

There's only a problem in the cities, down the country there are loads and I mean loads of empty houses.

Govt need to look a moving some of the new jobs to rural areas, 40 jobs in a rural area would be a huge boost and release some of the pressure on the city demands, multiply that by 10 and that's 400 houses freed up in the city, 400 houses filled in rural areas and a rejuvenated rural area.

Everyone wins !

A lot of our jobs are from US multinationals, after the disasters of xerox and ebay etc.. being tricked into thinking dundalk is a good spot, most of those companies employ local experts now to tell them thats a waste of time. These companies all want to be in dublin where the talent is now, nothing else will do.

I know engineers on 75k a year in dublin that have been begged to come work for companies in athlone, shannon etc… and to them anything less than 100k and a 25k relocation bonus just isn't worth it, the employers aren't going to pay that, but I completely understand why these talented workers don't want to leave to rural Ireland where even 20mb broadband is impossible.

Eric Cartman

Eric Cartman wrote: »

The issue with this "Central bank rules ruining things" argument is that 50% of purchases are by cash buyers at the moment.

Whatever we do, the central bank rules are actually a good thing, we shouldn't be looking for loopholes or tricks or extensions or exemptions to those. We should be figuring how to build houses profitably within those rules. The central bank rules are the only things keeping average income earners in with any sort of hope of getting a property and not crippling themselves into the ground.

the average industrial wage in Ireland is currently just over €35,000 , if we take that with the 3.5x + 1 (partner) rule for the CB and assume the partner is also on the average , we get 3.5x35,000 + 35000 = 157500 of a mortgage, which can be 90% of the property price, so we get €175,000.

So for a household of 2 people on the average industrial we have a guide of
17,500 deposit
157500 mortgage
175000 total property price.

so lets work on how do we build (profitably) a 3 bedroom semi (most popular house choice) for 175,000.

My best estimation is that taking out VAT and stamp duty for FTB's + a cut in regulations would certainly help.

For a couple it's 3.5 times their combined salary so both on 35k means 70k x 3.5 = a mortgage of 245k.

pablo128

Roger_007 wrote: »

The question posed is "Why aren't more houses being built to deal with the shortage.?"
Is there really a shortage?
Check this link to the housing agency discussion paper:-

https://www.housingagency.ie/getattachment/Our-Publications/Latest-Publications/16-05-17-Vacant-Homes-Paper-Housing-Agency.pdf.

According to the above paper, there are 230,000 empty housing units in the state. There are 24,000 empty housing units in Dublin alone. These figures exclude holiday homes.

Why do people think there is a housing shortage?

Are these houses available for sale, or rent? You can't just help yourself to somebody's empty property.

Del2005

pablo128 wrote: »

Im sick of hearing high rise, 80 storeys, city this and that. Bollox. We don't have any cities. Dublin is a large town centre. In the whole of Dublin is 1.2m people. Take tallaght out of it and there's less than a million. We are not that badly stuck for space that the best option is a skyscraper.

We had developers giving prices out a while back saying we can't build for less than X amount. When you looked into it the price was for a one off house in Dublin. No economy of scale or anything.

So you want people doing huge commutes to get to work. We can't keep building out forcing people to hours of travelling just to get to work. We do not 80 story buildings but we do need 30 floor buildings.

The banks not lending unless developments can make substantial profits isn't helping, especially when you can buy 2nd hand for less than the construction costs of a new build.

Eric Cartman

Lilly Billions Uranus wrote: »

For a couple it's 3.5 times their combined salary so both on 35k means 70k x 3.5 = a mortgage of 245k.

I was under the impression it was 3.5x the primary earner and 1x the secondary , are you sure you're right ?

pablo128

Del2005 wrote: »

So you want people doing huge commutes to get to work. We can't keep building out forcing people to hours of travelling just to get to work. We do not 80 story buildings but we do need 30 floor buildings.

The banks not lending unless developments can make substantial profits isn't helping, especially when you can buy 2nd hand for less than the construction costs of a new build.

Construction costs that have been shown to be exaggerated. Why are you scaremongering about long commutes? Not all jobs are in the centre of Dublin. And there are plenty of land banks on the outskirts of Dublin. Plenty of room for large housing estates.

Jurgen Klopp

Eric Cartman wrote: »

A lot of our jobs are from US multinationals, after the disasters of xerox and ebay etc.. being tricked into thinking dundalk is a good spot, most of those companies employ local experts now to tell them thats a waste of time. These companies all want to be in dublin where the talent is now, nothing else will do.

I know engineers on 75k a year in dublin that have been begged to come work for companies in athlone, shannon etc… and to them anything less than 100k and a 25k relocation bonus just isn't worth it, the employers aren't going to pay that, but I completely understand why these talented workers don't want to leave to rural Ireland where even 20mb broadband is impossible.

Not only that remember when Fianna Fail tried the decentralisation option years ago, I'm in the countryside and there's an estate that was built as an "e town" which was meant for civil servants and others to move to which has never been used as no one would leave Dublin for them. It's one of many that's going to waste after that fiasco

myshirt

I would mirror the above posters, though some factors I would add:

1. Culturally we have an issue with overpaying tradespeople. Plainly, labour costs need to drop, significantly.

2. We generally build top of the range houses, no bog standard ones, such are the regulations. This drives costs up.

3. CGT exemptions on Holdings up to 2018 is causing people to hoard land and property. If I held land, why release it? Instead just let the gains go up, because I will pay no tax for the gains that arose during 7 years of holding.

The_Conductor

pablo128 wrote: »

Are these houses available for sale, or rent? You can't just help yourself to somebody's empty property.

Tell that to the Minister- he seems quite happy to appropriate property at a whim..........

Seriously though- its all well and good having vacant properties in rural Ireland- however, if they are not fit for purpose- which is within commutable distance of Dublin- or within 40 minutes of Dublin airport- they are going to stay vacant.

Dublin is the only town of scale we have in Ireland- its simply implausible to try and sell Carrick-on-Shannon to a multinational, on the basis that it has 900 vacant properties- so what it has 900 vacant properties- the prospective workforce, who tend to be young, mobile, non-nationals- don't want to live there- period.

Shelflife

Eric Cartman wrote: »

A lot of our jobs are from US multinationals, after the disasters of xerox and ebay etc.. being tricked into thinking dundalk is a good spot, most of those companies employ local experts now to tell them thats a waste of time. These companies all want to be in dublin where the talent is now, nothing else will do.

I know engineers on 75k a year in dublin that have been begged to come work for companies in athlone, shannon etc… and to them anything less than 100k and a 25k relocation bonus just isn't worth it, the employers aren't going to pay that, but I completely understand why these talented workers don't want to leave to rural Ireland where even 20mb broadband is impossible.

I realise that it's not as simple as I set out, but this is where a bit of forward thinking (I know I know) is required. Yes there are infrastructure issues , but the cost saving in housing of those who move would be huge. You can rent a nice 3 bedroom house in my area for €650

The_Conductor

pablo128 wrote: »

Construction costs that have been shown to be exaggerated. Why are you scaremongering about long commutes? Not all jobs are in the centre of Dublin. And there are plenty of land banks on the outskirts of Dublin. Plenty of room for large housing estates.

We do need more development on the outskirts of Dublin- yes- however, we need proper facilities and amenities to support people to live there- including, but not limited to, a viable public transport system.

Also- I'd argue that we quite simply do not need more large housing estates- ye semi-d with a garden- is not what a lot of young people want- a nice apartment, of a reasonable size, with good access to appropriate facilities and amenities- is so much more important.

Roger_007

pablo128 wrote: »

Are these houses available for sale, or rent? You can't just help yourself to somebody's empty property.

Other countries have dealt with this problem by imposing a special tax on empty properties. In France they impose a tax of 50% of the assessed potential rent if a property is left vacant for more than a year. There is nothing to stop us from doing the same here.

Eric Cartman

Eric Cartman wrote: »

I was under the impression it was 3.5x the primary earner and 1x the secondary , are you sure you're right ?

No it's definitely 3.5 times the combined salary (leaving out any reduction due to loans, child care etc). If you use one of the mortgage calculators for a joint applicant it will confirm this.

pablo128

The_Conductor wrote: »

We do need more development on the outskirts of Dublin- yes- however, we need proper facilities and amenities to support people to live there- including, but not limited to, a viable public transport system.

Also- I'd argue that we quite simply do not need more large housing estates- ye semi-d with a garden- is not what a lot of young people want- a nice apartment, of a reasonable size, with good access to appropriate facilities and amenities- is so much more important.

The problem there is that there were regulations set out for a minimum apartment size about 7 or 8 years ago. Recently as far as I know the building industry successfully lobbied to relax some of those regulations. Our council apartment is tiny. It was built just before the regulations came into effect. And it shows. Zero storage. I have a ****load of tools, welders etc, from my days as a mechanic. I have space here for a shoebox full of tools under the sink. The rest of my stuff is at my folks house. Its no way to live.

The_Conductor

Pablo128- I hear you.
That's why I specifically said 'of a reasonable size'- there are tens of thousands of properties out there that I'd argue, are not fit to be lived in- they are of unreasonable size.

the_pen_turner

myshirt wrote: »

I would mirror the above posters, though some factors I would add:

1. Culturally we have an issue with overpaying tradespeople. Plainly, labour costs need to drop, significantly.

2. We generally build top of the range houses, no bog standard ones, such are the regulations. This drives costs up.

3. CGT exemptions on Holdings up to 2018 is causing people to hoard land and property. If I held land, why release it? Instead just let the gains go up, because I will pay no tax for the gains that arose during 7 years of holding.

where are you getting this from. they need to go up before we start making profit. obviously not to the tiger levels but up a lot.
the general guys on the ground are barely breaking even.
they should charge at least twice what they are so that their business is getting paid as well as themselves.

1st dalkey dalkey

Towards the end of the boom we were building 80K housing units per year. Over three times the estimated annual requirement of approx 25K. Why?

After the collapse we were building almost nothing, despite the requirement still being the same. Why?

In both instances banking and availability of credit played a huge part, as it does today.
But the real issue is that markets are prone to peaks and troughs. All markets suffer from them and without some sort of counter balance, they always will.

Historically in Ireland, the local authorities were providers of homes for people on the lower wrung of the earnings ladder or with no earnings at all. They also provided fixed rate loans to people who were buying their own homes, up to a certain income threshold. They also helped fund group building schemes, where groups of individuals would get together and build their own houses, doing some of the work themselves and hiring in where they needed to.

All of those housing options were got rid of to further a particular political agenda. The FF party and the Galway tent brigade were the main beneficiaries of the new paradigm. FG have taken over and are even more hog tied to the ideology.

The basic answer to your question, why are houses not being built.

Because it suits a cabal of politicians, businessmen and bankers to have a tight housing market producing high prices and rents for them and their friends.