Friday 25 May 2018

Noonan tells Nama to speed up land sales in bid to boost housing

Minister for Finance Michael Noonan
Minister for Finance Michael Noonan
Wayne O'Connor

Wayne O'Connor

Nama has been told that it must bring land to the market more quickly to stop developers hoarding sites.

Finance Minister Michael Noonan is concerned that the State's bad bank could be encouraging a trend of holding on to land in the anticipation of price increases.

And he said that hoarding distorted the value of development land that could otherwise be used to ease the mounting housing crisis.

Housing is one of the major issues facing the next Government and has dominated the agenda in recent days.

A rental market squeeze, made worse by a lack of supply of affordable homes, has pushed a record 6,000 people into emergency accommodation in B&Bs and hotels.

Meanwhile, the ESRI think tank has warned that Ireland is repeating the mistakes of the boom by making it impossible for families to buy homes near their workplace, meaning that they face long commutes from beyond the suburbs.

In correspondence obtained under the Freedom of Information Act, Nama was recently asked to increase the scale and pace of delivering residential units in areas of high demand.

Mr Noonan warned that the bad bank may be reinforcing a trend that is being followed by other developers - not selling land quickly enough.

But the minister told Nama that ensuring quicker supply of land to the market would "reverse" hoarding and encourage a faster supply of family homes.

"If the market believed that significant supply was coming to the market, expectations of future price increases would be tempered, which may lead to a reversal of hoarding behaviour.

"It seems that this behaviour may be self-fulfilling," he wrote.

"Withholding property from development will exacerbate the supply shortfall and drive future prices higher - reinforcing developer decisions to withhold property from development.

"I would like your assurance that in such cases Nama is doing everything it can to bring these sites to market as soon as practicable."

The minister believes that reversing this trend is a key issue to relieve huge pressures on the housing market.

Builders and developers are currently struggling to get projects off the ground, despite a chronic shortage of housing.

Construction Industry Federation of Ireland director general Tom Parlon has acknowledged that hoarding is an issue.

"People have bought too dear and the current market price will not stand up that sort of value now," he said.

Nama has proposed that the Department of Finance should engage with banks in order to establish whether there are measures which could be taken to speed up the sale of residential land sites.

It also said that loans should be advanced to local authorities to cover the cost of infrastructure that is needed to tackle the housing crisis.

Irish Independent

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