Joe O’Reilly, the founder of Castlethorn Construction and Chartered Land, chose an interesting topic at the end of his recent appearance before the Oireachtas banking inquiry, when asked if there was a final comment he wished to make.
Pointing out that there is a large demand out there for housing and offices, he asked where the money for them was going to come from? For housing alone, he said, the estimated requirement for 30,000 houses, at a total building cost of €300,000 each, meant financing of €9 billion. Enabling people to buy those houses, at a loan to value ratio of 80 per cent, will require a further multi-billion amount.
“It’s just a phenomenal figure,” said O’Reilly.
It certainly is and it puts in perspective the reported decision of the Ireland Strategic Investment Fund to enter the private residential property market with a €500 million plan to provide large loans to housing developers. Even if the public money is matched,or at least bulked out with some private investment firm funding, it will still be a long way short of the type of figures conjured up by O’Reilly.
At a recent briefing, Eugene O’Callaghan, director of the fund, noted that Ireland was emerging from a “debt-fuelled financial crisis” and it would be up to 20 years before the banking sector was “back on an even keel”.
So €18 billion plus is a big figure and up to 20 years is a long time. Meanwhile increasing stress is being placed on people in the rental market, not to mention those with growing families that need to move to larger, more suitable homes, and of course, the growing numbers of homeless.
If O’Callaghan is right about the banks, then we need to see many more innovative solutions, with developers teaming up with international funds, vulture or otherwise, to get the money needed to build the necessary homes and offices. All in all, however, it looks like the type of problem that will take a bit of time to fix. Which is not good news for those suffering from its consequences.
Bring back the builders...?