Noonan hopes housing event will kickstart building
Finance Minister Michael Noonan has invited 100 developers, banks and private equity companies to an event next month to find a way to kickstart the housing sector.
Mr Noonan wants to steer through the financing stalemate that has prevented the €3.5bn worth of new homes required each year to tackle Ireland's housing crisis.
By gathering various stakeholders together under the same roof to the invite-only session, the Department of Finance hopes to enable the construction sector access development finance. The March 4 event at Dublin's Marker Hotel is being organised jointly with the Construction Industry Federation (CIF).
Mr Noonan will speak at the meeting, which will see presentations to outline how builders can access funding, the lack of which has been blamed for curtailing new home starts.
The increased demand for housing sent prices in the capital spiralling by 20pc last year, and this trend recently spread to Ireland's regional cities and towns.
Less than half the number of homes required were constructed last year, with 11,016 built.
However, the ESRI, the Central Bank and the Government all estimate that at least 25,000 houses are required to meet the country's growing demographic needs.
Generally banks have been limiting development loans to 60pc of the amount required to finance a project.
This means that house builders, contractors and developers must try to secure extra finance elsewhere.
A source close to Mr Noonan said the event was being organised "to bring together debt and equity providers with developers to promote a greater awareness of the extent to which all stakeholders are connected and a better alignment of shared incentives".
He added: "The department's work on development finance options is nearing completion as part of the Government's Construction 2020 strategy.
"This strategy is about ensuring that any critical bottlenecks that might impede the sector in meeting residential and non-residential demand are addressed."
Among the department's recent findings were issues with developers themselves - that some have been slow to accept the higher cost of equity funding which now prevails.
Meanwhile, others lack the experience and information to access it.
The department spokesman added that providers of risk capital would also be introduced to representatives from the construction industry.
CIF director general Tom Parlon said: "We are all aware that we need to see more construction taking place, and more houses being built to meet the needs of the country.
"Builders want to build - but they simply haven't been able to secure the money required to get a project off the ground."
However, Mr Parlon also admitted that builders had to change. "The industry has to start looking at other financing models and that will involve a learning curve for the sector," he said.
"Offering project equity to multiple participants is a funding method which will need to be utilised if more projects are to progress."