Developers are only building homes for the rich, report warns
Developers are only building homes to cater for the upper end of the market, a report for the Government has warned.
This is a major problem in Dublin, where almost half of all buyers are paying in cash.
And the Dublin Taskforce also says city and county councils should be given ramped-up powers to acquire land under compulsory purchase orders to help kick-start construction of affordable homes.
The taskforce said that only "limited product" was being constructed, priced at €300,000 or below, and that large tracts of development land were not being brought to the market.
Its report warns that the market is only returning to "normality" in upmarket areas where house prices are already high. This is based on its own analysis and "numerous reports" from estate agents, it says.
"It is clear that the market, such as it is, is getting greater traction in those areas commanding higher house prices," it says, adding these areas are in north and south Dublin, as well as the western suburbs within the M50.
"By coincidence, these transactions are 47pc cash-based. It is likewise noticeable that there is limited product being brought to the market at what would ordinarily be deemed affordable to the general population, ie valued at around €300,000."
The report says that Central Bank lending rules could be "dampening" price growth, which "should be seen as a positive" in a market with affordability issues. But it also says that "large tracts" of land capable of being developed are being kept from the market.
There have been "high levels" of block sales due to "banking and receivership considerations". This is "likely to change" in the next year, it says.
But it also recommends "active land management instruments", which includes local authority buying and banking land for future use and enhanced CPO powers.
"This matter has been examined in some detail previously by NESC (the National Economic and Social Council) in its 2004 report on 'Housing in Ireland: Performance and Policy'. It may be time to revisit its recommendations," it says.
NESC, which is an advisory body to the Government, had said there was a "strong case" for local authorities to use CPO powers to acquire lands, including those held by institutions, before they are zoned for residential development.
These could be used for mixed housing, social infrastructure or sold to developers. This could require legislation to be "streamlined".
Established under the last government's Construction 2020 strategy, the Housing Supply Co-ordination Taskforce for Dublin also says that demand continues to outstrip supply in Dublin, with a 12pc drop in the number of homes completed last year, compared with 2014.
But it says there is potential to deliver almost 48,000 homes on lands zoned with essential services, including roads and a water supply, already in place. More than 34,000 units have permission and another 6,912 are in the planning process.
"On this basis, it is clear that the availability of planning permission is not a constraint at this point in time," it says.
"A greater understanding of the ownership of these permissions and the reasons as to why they are not being operationalised is necessary."
Among the reasons for the lack of delivery are large loans being owed on land banks, coupled with a lack of access to finance to build homes.
On a positive note, it says there are 123 active construction sites across Dublin with 4,400 units under construction.