28 June 2001 Edition

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Vested interests in housing market must be challenged

BY ROBBIE MacGABHANN

As increasing job losses, tribunal revelations and the debacle over Nice dominate much of news comment in 26-County politics, one important issue is slipping slowly off the agenda - housing.

The Fianna Fáil and Progressive Democrat coalition will no doubt be celebrating their fourth year in office this week. But the last four years have also marked an unchecked housing crisis in the 26 Counties.

Yes we have had three expert consultancy reports, one commission on the rented sector, a new planning act and the belated investment of government funds into public sector and social house building after years of neglect. However, this has not solved the central problem of ever increasing house prices and the need for direct Dublin government intervention in the housing market.

Two reports on the housing market, covering new house completions and house prices released over the last week bring this necessity for intervention into clear focus.

New private sector house completions have fallen by 20% in the first five months of 2001 compared to the same time last year.

Ciaran Ryan, a director of the Irish Home Builders Association believes that this is due to objections to social housing schemes, problems with the planning process and other restrictions under the new planning act.

Under the terms of the act, developers have to put 20% of house building land aside for social housing schemes and have to build on sites zoned for housing development within two years of getting planning permission.

The two-year provision was introduced to stop developers amassing large banks of land for building and then drip feeding houses onto the market in order to artificially inflate prices. Ryan claims that the two-year deadline is difficult to achieve for builders. He also cites a lack of planners to deal with development applications as a reason for holding up the number of new house completions.

However, Ryan also gives another reason for the fall in house completions. New house buyers do not want to be beside social housing schemes. ``If you're shelling out a lot of money, you have every reason to be concerned,'' he said.

There could be though, another twist to this housing saga. The Irish Permanent/Economic and Social Research Institute House Price Index shows that the price of new houses has shown much smaller growth than this time last year, with small falls in new house prices in some areas. There was no growth in new house prices in May.

Between January and May new house prices rose by 4.4% compared to 9.3% for the same time last year.

Could it be that the house builders who are best placed to gauge the strength of the market are back to their old tricks of restricting supply to increase price. They can see the fall in prices and are slowing up their building programmes.

It is interesting that there is so much squealing from the construction industry over this very weak planning act. It shows that the Dublin Government must act now to stop vested interests manipulating the house market and keeping house prices artificially high. With average house prices still rising to £145,436 for a new house in May 2001 compared to £125,535 in May 2000, the coalition should put the anniversary celebrations on hold and go back to the drawing board on this important social problem.

An Phoblacht
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