Bad week for builders as they wake up to ruling on social housing


It has been a bad week for Ireland's housebuilders, as they wake up to the fact that in future they will have to hand over 20 per cent of their sites or houses to the Government for social housing. In this way, the Government is hoping to solve the housing crisis before the next general election - but don't hold your breath.

Housing starts have not picked up as significantly as the politicians had hoped, mainly because of the delays in servicing land. The fact that nearly all planning permissions are referred to An Bord Pleanala is also frustrating Government attempts to take starter homes off the agenda.

Nobody was terribly surprised by the Supreme Court's endorsement of the Government's policy. Certainly there seems to be little sympathy for the builders, who are probably foolish to react with a warning that prices will shoot up yet again.

The reality is that builders have brought a lot of this on their own heads by their pricing methods over the last few years. Too often, the developers released only a handful of houses or apartments in any given scheme, bumping up the prices as soon as the first buyers had paid their deposits. This "phased" release of homes has caused a lot of frustration for buyers and forced the powers that be to move against the builders.

A lot of the heartache and crawthumping could have been avoided if the Government had acted earlier and reintroduced a system of monitoring and capping new house prices (previously known as the certificate of reasonable value). The danger now is that builders with extensive land banks will simply hold back sites until they see how the sand settles, thus creating another bottleneck in supply.