Sunday 18 August 2019

Gannon: New lending rules cut sales of new homes by half

Developer Gerry Gannon: profits of €4.4m in 2014
Developer Gerry Gannon: profits of €4.4m in 2014

Gordon Deegan

One of the country's best known house builders, Gannon Homes, has claimed the new Central Bank rule on mortgage lending is the main factor behind the firm sustaining a 50pc drop in house sales this year.

During the housing boom and bust, the firm's owner, Gerry Gannon, was one of the best known developers.

His firms owed €214m to banks here on the night of the Government's bank guarantee in 2008.

However, Mr Gannon's Dublin-based firm made a strong comeback in the housing market last year with revenues increasing almost-eight fold going from €5.67m to €43.8 million.

Accounts filed show that Mr Gannon's Gannon Homes Ltd was able to record pre-tax profits of €4.4m on the back of its 2014 revenues.

A spokesman for the firm said yesterday that the company last year sold between 180 and 200 new homes and that house sales by the firm this year will be just half that.

He said: "We haven't increased pricing. Nothing has changed in the ingredients apart from the introduction of the Central Bank rules requiring new buyers of houses valued over €220,000 to have a 20pc deposit.

"There is no question that the mortgage rules have resulted in the drop in sales."

The spokesman said that house buyers have demonstrated that they can make mortgage payments of €1,200 per month when they are paying €1,500 rent a month at the moment.

He said: "There is a total disconnect there that is increasing the pressure on the rental market where couples are unable to secure mortgages and have to keep on renting."

Irish Independent

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