Sunday 22 October 2017

Prices must fall - but dream of owning a home is still achievable, insists Coveney

Young people should not give up on dream of owning a home, said the Housing Minister (stock photo)
Young people should not give up on dream of owning a home, said the Housing Minister (stock photo)
Paul Melia

Paul Melia

Young people should not give up on the dream of owning their own home, Housing Minister Simon Coveney has insisted.

While the housing crisis will not be solved "overnight", output is ramping-up and 25,000 units a year will be delivered by 2019 - two years ahead of schedule - increasing to 30,000 by 2021, he pledged.

The number of units granted planning, under construction and completed is increasing in the wake of changes to mortgage lending rules and the introduction of the Help-to-Buy scheme, but he said it was clear that prices had to fall.

Asked if the increasing cost of buying a home would rule out ownership for many, he insisted: "No, not at all. National house prices are back to where they were in 2002.

"We have a lot of pent-up demand which was notional, but couldn't result in the purchasing of homes in the last seven or eight years because they weren't being built and the banking system wasn't able to finance homebuying.

"Clearly it's not sustainable to have house price increases of 9pc or 10pc a year. Clearly we need to get prices down, and a much more predictable housing market."

Mr Coveney insisted though that increasing building will help counter the soaring demand for homes. He told the Irish Independent: "Rebuilding Ireland is working.

"We are in train to double output by 2019 - I think we'll hit 25,000 (units) - and by 2021, the year we had targeted to hit 25,000, I think we'll be over 30,000.

"I think we need to be producing around 35,000 units a year for a growing population with a lot of pent-up demand."

Rents

The introduction of the Help-to-Buy scheme, criticised for fuelling house prices, was needed to help send a signal to developers that a market for new homes existed, he said.

"The reason why we intervened to help first-time buyers was because this time last year many were locked out of the market, and as a result locked into a pressurised rental market because they could not save for a deposit at the same time while meeting rents," he said.

"If we didn't do something to help first-time buyers, builders wouldn't build for them because they knew they couldn't get a mortgage together."

But he admitted that a number of issues remained to be addressed to speed up the pace of delivery.

He said these included land costs, delays in the planning system and use of State lands to deliver affordable homes.

The Government's Rebuilding Ireland plan had a "comprehensive" response to homelessness, social housing delivery and the rented sector, with 57pc of tenancies now in Rent Pressure Zones where hikes were limited to a maximum of 4pc a year until 2020.

He also said that if local authorities were not delivering social houses, he would consider establishing a national agency to drive delivery.

Some 8,500 units are under construction or at final approval stage across 500 sites. "If I develop a view that local authorities don't have the capacity or sense of urgency to deliver social housing at the pace we need, I will look at other structures," he added.

Irish Independent

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