Builders are 'losing up to €20,000' on each new house outside the capital
One of Ireland's top developers has warned that the housing shortage will not be tackled until issues surrounding construction costs outside Dublin are addressed by the next government.
Owen O'Callaghan pointed out that builders faced losing up to €20,000 on every estate home sold outside Dublin, despite the chronic housing shortage.
He said Ireland had to urgently tackle the bottleneck which was preventing house construction from catering for the surging demand for homes.
The chronic shortage of housing is driving up private sector rents and, according to housing charities, forcing increasing numbers of people into homelessness.
It emerged this week that there isn't a single house available in Cork city within rent supplement limits.
Property Industry Ireland (PII) director Peter Stafford has estimated that Ireland needs 63,000 new housing units by 2018-19.
Mr O'Callaghan pointed out that in his native Cork there was a need for 9,000 estate homes.
Dublin brought 2,800 new housing units on stream in 2014 - but experts have warned the city requires at least 8,900 per year by 2019.
The Construction Industry Federation (CIF) said one-third of the cost of a new home reverted to the Exchequer through levies, taxes and development charges.
"Right now, between VAT, development levies, site costs and the implementation of new building regulations, the cost of building an estate house, on average, is about €20,000 more than the likely sale price," Mr O'Callaghan said. "No builder will build if he is likely to lose €20,000 per unit.
"The new Government should give serious consideration to the removal of VAT on housing, at least on a temporary basis, to stimulate the house building market," he added.
"There is no way that the gap between supply and demand will be bridged under the current realities."
CIF regional director Conor O'Connell said that over the first nine months of 2015, just 312 units reached the Cork market, despite a demand for thousands of homes.
CIF said that, in Cork alone, a minimum of 2,500 new units were needed each year. It added that similar trends were emerging in other Irish regional cities.