The Government could address a “massive rump of cost” associated with building houses through tax and regulatory changes, according to financial analyst Karl Deeter.
He speaking after a new report found that couples need a joint-income of almost €100,000 to buy the cheapest apartment in the Greater Dublin Area.
The report from the Society of Chartered Surveyors Ireland found that Dublin apartments range in price from €359,000 in the suburbs to €619,000 in the city.
It notes that a couple buying their first home would need a deposit of €38,000 and a joint-income of €98,000 to enter the market.
On Newstalk Breakfast this morning, financial Analyst Karl Deeter said the Government has the tools to increase housing supply by reducing costs.
“I think the issue really we need to start talking about at some stage is the non-construction cost,” he said.
“The same report shows that only about 50% of any building is the prime costs. In other words, the labour and the materials which you might refer to as construction costs – all the rest is your VAT, your taxes your levies etc. and that is a huge problem.”
Housing costs
He said the issue could be addressed through as number of fiscal and legislative tweaks at Government level.
“If half the cost is only the materials and labour – and then you are going to have to add something on for land because that has a price as well – then you see there is this massive rump of cost that can be addressed,” he said.
“It can be addressed by the State because, if they are the ones that are charging the taxes, the levies and all the red tape costs that go with it, that is something we could look at.
“We seem to go about it a different way, we try to instead give people more money through tweaking the rules, shared equity, Help-to-Buy and things like that.”
Building workers on the Elsmore housing estate at Naas County Kildare, 18-01-2021. Image: Eamonn Farrell/RollingNewsMr Deeter said the current cost of housing means there are only two types of buyer out there.
“There is the well-paid people who have secure jobs and then there is the investors who are either build-to-rent institutional buyers or approved housing bodies,” he said.
“So, you come from one of two camps, you are either in secure well-paid employment or you have access to super-cheap money – and that is not really a good housing environment for anyone.”
He acknowledged concerns the reduced costs would be soaked up by developers rather than passed on to homebuyers but insisted they, “feed into our most basic fears as a society.”
“Let’s just say they did,” he said. “Well, then all the other developers and everyone who had half a chance of building anything would say, ‘wow there are windfall gains to be made here.’
“They would pile into the sector and drive down prices through competition. That is how a regular market works. If something has loads of money on the table and there is a giveaway, no one gets a monopoly on that, other people go in and grab the same thing.”
Vacant sites
He said the plan would open up smaller sites currently overlooked by developers.
“We have skilled housing creators all over the length and breadth of this country,” he said. “All over the cities, major developers won’t even go into a lot of sites because they are too small.
“You can actually create a huge amount of housing through infill sites. We could solve our housing crisis tomorrow through unused buildings, underused buildings, derelict buildings and a few of the vacant sites around our cities.
“That would get it done.”
You can listen back here:
