Lack of new homes is a threat to job creation, says think-tank
The lack of new homes coming on stream is damaging Ireland's competitiveness and threatening job creation.
A Government think-tank says the State needs to resume house building, and should enter deals with developers to use publicly-owned land banks held by Nama and other agencies for housing.
The National Economic and Social Council (NESC) says that these lands could be provided if the developer agrees to cap rents, and warns that the scale of the crisis in the construction and housing sectors is such that "nothing short of a complete remaking of the sector seems likely to succeed".
Despite the economic recovery, it says the lack of housing is "damaging to Ireland's competitiveness and employment creation" and poses a real risk to economic recovery and social inclusion.
The Government has admitted that between one-third and a quarter of the population will find it "increasingly difficult" to achieve home ownership. It says that unless profound changes are made in how we deliver homes, there is a "real risk" we will return to the "earlier patterns" of development.
The NESC says it is "hard to exaggerate" the significance of housing policy goals which centre on affordability, sustainability and inclusion.
A number of measures could be taken, including a reduction in development levies and VAT on residential construction, but that it would be "unsafe and unwise" to rely on these alone.
There is a need for a land tax which shifts the incentive of landholders towards development, and there needs to be closer dialogue between planners and public agencies, potential developers and financiers.
It says that in the past, local authorities played a key role in the land market, owning 30pc of zoned building land in the 1970s, selling when prices were high and buying during the downturn. This meant it could dictate that serviced lands close to essential infrastructure such as public transport links were developed.
A weakness of the current model is that when masterplans for areas are developed, such as Adamstown in Dublin, they are reliant on the market to ensure they are built.
It says that while Nama controls development loans, the ownership of land remains with the developers. They may hold off using this land in the hope that prices will rise, ultimately adding to housing costs.
The Government needs "stronger policy" to undertake a more ambitious approach to housing and land supply, it says.
There is a "strong case" to use key sites owned by Nama to develop joint-ventures, which could provide 2,000 quality homes for private renting, which could be released at a "reasonable price" and linked to conditions around rents.
This would represent a better return for the State, put a ceiling on rents, improve access to affordable housing and improve competitiveness, it adds.