Ireland should introduce VAT cuts and create a fund for small and medium-sized developers in order to curb “unsustainable” price inflation in the Dublin residential market, according to a new report by the Society of Chartered Surveyors.
The city is currently dealing with a serious undersupply of housing, and residential property prices have climbed by 22% year-on-year, according to the latest figures from the Central Statistics Office in May. House price inflation is currently running at 24% year-on-year.
A 10-step strategy released by the SCSI this morning suggests that VAT on new home construction be reduced from 13.5% to 5% for two years and calls for streamlining in the planning process to encourage the development of new homes.
The society has also called for the government to introduce a pot of money similar to the UK’s £525m Builders Finance Fund to help small and medium-sized developers to speed up housing development.
The Housing Agency estimates that Ireland needs an average of 15,932 new homes per year over the next five years to meet the demands of changing demographics, with 47% of this new supply needed in the Dublin area.
House building in Ireland has ground to a virtual standstill since the 2008 property crash. Approximately 89,000 homes were built at the peak of the market in 2006, compared with just 8,301 last year.
sophia.furber@estatesgazette.com
