The number of family homes being built in Dublin needs to treble in order to meet pent up demand, Transport Minister Leo Varadkar has said.
Mr Varadkar, said today that the Government is likely to introduce further measures in order to stimulate the construction sector but added it would be careful to avoid the mistakes of the past.
But the minister said that housing supply must increase significantly, particularly in the Dublin area in order to avoid a massive supply shortage.
Such a shortage in supply is likely to lead to another price bubble, denying many young couples the chance to buy their first family home.
“We want to get construction back to a sustainable level. There was an over correction. We are going to need more housing supply. I heard John Fitzgerald from the ESRI saying we’ll need to treble the housing supply in Dublin area,” he said.
He added: “If we did treble the number of houses being built in the Dublin area that is a huge number of extra jobs, it’s extra VAT and extra stamp duty”.
Mr Varadkar said the Government is to follow up the reduced VAT rate for homeowners who undertake more than €5,000 worth of renovations on their homes with a further incentives.
“We have done a few things. People can get the VAT back on improvements done on their homes, that’s important and there is likely going to be a few other things,” he said.
But he ruled out any “property based tax incentives” which he said helped the country get into the mess it is in.
“We have to be careful not to introduce any incentives that would over stimulate the construction sector. I don’t see any move toward property based incentives or anything like that which got us into the mess we are in in the first place,” he said.
According to the Construction Industry Federation, just 750 new houses were started in the Dublin area in the first nine months of 2013. It said in reality it could take two to three years in order for supply to catch up with demand. Developers are still slow to begin building as it remains too expensive to build houses and access to finance from the banks remains incredibly restricted, the CIF has said.
Mr Varadkar was also critical of the use of legal letters threatening repossession by the banks, saying it was not a sustainable solutions.
“Yes in some cases repossessions may be necessary and the repossession rate in Ireland is very low but it is not a sustainable solution. There are so many options now that the banks can offer people. Well the Central Bank has said and I would agree with it is that legal letter threatening to repossess your house is not a sustainable solution.”
“We are going to hold the banks to account and hold them to their targets and offer people a way out of their debts. We have to be cautious. What is offered to people is not going to be a free pass, it is not a debt write off. It is going to be a resolution regime.”