By Ryan Nugent
AFFORDABLE residential developments are not being built because developers are “very worried” they won’t be able to sell to people struggling to get mortgages.
That’s the verdict of the deputy chief executive of the country’s largest local authority, Brendan Kenny. He says Dublin City Council is willing to try anything to resolve the housing crisis, but can only do so when private developers build “like they used to”.
Mr Kenny pointed out that new student accommodation hubs and hotels have been “flying up” – but private residential developments are not happening at the same pace.
“It’s kind of ironic. If you have a developer building in Ballsbridge or Donnybrook or Docklands at €800,000 to a million, they’re selling, but a developer who wants to build a housing estate in Cabra for €300,000 to €350,000 each, he’d be very worried if he’d get buyers for it,” he said.
“We’d like to see more private residential, the private sector is not really moving. We can only do so much. I don’t think we can solve the housing crisis in the city.
“We need the private sector building like they used to and they’re not.
“They’ve a lot of land in the city, they’re building student accommodation, flying up, they’re building hotels, flying up, but they’re not building residential.
“There’s probably a few reasons for that. The building of residential is not viable for them. They find it hard to borrow money to build and also these days they’re not sure they’ll get buyers because it’s very hard to get mortgages.”
Figures released by the Banking & Payments Federation Ireland (BPFI) last October showed that some 11,000 people drew down a mortgage worth an average of €220,730 in the three months to September.
It is believed much of this was driven by first-time buyers and represented an increase on the same period in 2017.
The average home loan amount at €220,000 is much less than the mortgage required for a house in the region of €300,000 to €350,000. House prices in urban centres such as Dublin, Cork and Galway have skyrocketed in recent years due to a chronic lack of supply.
Last year, Taoiseach Leo Varadkar referred to units costing €315,000 in a residential development in North County Dublin as “affordable”.
CSO data issued in November showed that fewer houses are being bought as property prices continue to rise. Economists said the surge in prices in recent years and Central Bank lending limits on mortgages are taking the steam out of the market.
In relation to dealing with the ongoing housing crisis, Mr Kenny says it could be another three years before any real difference is seen in housing, and concerns about the crisis won’t be allayed next year.
And he has insisted that local authorities can’t fix it alone, they need more help from private developers.
Dublin City Council is facing a battle on two fronts – one is short term, to ensure there’s enough emergency accommodation for those presenting as homeless.
The other is getting families back into permanent homes by building and buying. “We’re willing to try anything. I have staff trawling the city. I’ve staff looking at papers every single day to see what’s in the papers, what’s available and we’re out there ready to bid, either to buy or to lease.
“We simply can’t get anything. If there were properties out there we’d buy them up, if there’s hotels available they would buy them up and put families into them,” said Mr Kenny. “We’ve actually followed through on a number of hotels and we haven’t been successful.
“We have a couple in mind outside the Dublin area that could come to something early in 2019, so I’m not against that. So the reality is we’re willing to try anything.”
Earlier this year, Housing Minister Eoghan Murphy wrote to Dublin’s four local authorities pressuring them to reach high targets of family hub spaces by the end of 2018. The targets were almost impossible to reach, according to Mr Kenny.
The council’s chief executive Owen Keegan wrote back to Mr Murphy explaining this while floating the idea of a cruise ship to help address the crisis. This would have been for housing single homeless people, as opposed to families.
When asked about the possibility of it at the time, the minister dismissed it out of hand.
But if the crisis deteriorates further, it is still on option that’s on the table, Mr Kenny says.
“That’s something we thought about and it’s something we wouldn’t rule out. We don’t think it was such a bad idea as people thought and we did go into some of the detail of it at the time,” he says.
“It would be a very controversial way of doing business but it works well in other cities so we wouldn’t rule it out. But it’s not something we’re considering at the moment.”
The council says it hasn’t much of its own land left to build on. Some 90 hectares is allotted for current developments, with the remaining 30 or so in areas such as Ballymun, Darndale and Cherry Orchard – places which already have a high concentration of social housing.
In four or five years, Mr Kenny says DCC will have no land left to build on.
“We don’t want to recreate the problems of the past.
“We could go to Ballymun and build thousands more high rises, but it wouldn’t be the right thing to do.”
The council has developed a framework to speed up the procurement process, along with using emergency powers to cut some more time. It is also building volumetric units – mainly apartments – with the majority of 1,000 planned for 2019 across
It is hoped homes can be built in 18 months rather than the current three years.