O’Flynn says ‘housing crisis’ is Central Bank’s fault

One of Ireland's biggest developers has said the country is in the middle of a "housing crisis" partly due to Central Bank restrictions on mortgage lending.

Cork developer Michael O'Flynn, in an interview with The Irish Times, says three potential house purchasers in his latest scheme in Lucan, Dublin, asked for their deposits to be returned as they could not meet the Central Bank's rules.

“We’ve lost sales because of it. The blunt reality is that the concept of the Central Bank instrument was good but the application and the timing of it [January 2015] was wrong.”

He says Central Bank governor Philip Lane’s plan to review the rules later this year had not helped the situation.

“Telling people in this country that you’re going to do something either causes a rush to buy, or causes a pause. People are holding back thinking they’ll be able to buy a different type of house [when the review is concluded]. So it’s serving no purpose.”

First-time buyers

Central Bank rules require first-time buyers to have a deposit of 10 per cent for the first €220,000 of a house price and 20 per cent on the balance. Mr O’Flynn says the cap needs to be raised to €300,000 in Dublin as it is “limiting lending”.

He said a mandatory mortgage indemnity guarantee “could fix any exposure the banks would have in this area”.

Mr O’Flynn is also concerned that the election might deliver a hung Dáil.

"Fine Gael and Labour is the only realistic option [for government] but I'm worried as to whether they'll get to the numbers.