Ensuring that we have a supply of housing that is affordable for people to buy or rent, depending on their choice and circumstances, is a priority for the Government.
The underlying factors driving house prices now are fundamentally different from those which drove prices leading up to the financial crisis: current pressures in the housing market reflect a shortage of supply to meet the present demographic demands for housing, whereas previously credit was one of the primary factors contributing to house price inflation.
The credit environment now is markedly different. There is now an enhanced regulatory regime in place to monitor and manage risks to the economy emerging from the housing sector. The Central Bank's macro prudential rules, which are working effectively, aim to increase both bank and borrower resilience and mitigate the risks of credit fuelled house-price spirals emerging.
The availability of appropriate development finance for commercially viable residential projects has been identified as a key contributory factor to underpin further progress in addressing the shortfall in housing supply. The Government is meeting this challenge through the launch of Home Building Finance Ireland (HBFI) which will utilise up to €750 million to provide debt funding for residential development, funding new housing construction across all regions in the country.
In overall terms, the key elements of the Government’s approach to addressing the issues in our housing sector are set out in the Rebuilding Ireland Action Plan for Housing and Homelessness, and Project Ireland 2040, which sets out a comprehensive set of measures designed to address the on-going structural constraints within the construction sector and restore the housing market to a sustainable equilibrium. The CSO’s most recent Residential Property Price Index , published on 14 November 2018, shows a moderation in house price growth rates; in the year to September 2018, residential property prices at national level increased by 8.2%, compared with an increase of 8.9% in the year to August and an increase of 12.0% in the twelve months to September 2017. In Dublin, residential property price growth continued to moderate, with an annual increase of 5.8% in the year to September 2018.
Increasing housing supply, however, is the most important element of our response to the housing crisis. In that regard, the most recent data show the continuation of some very positive trends:
- Planning permissions (Q2 2018) granted up 39% year on year;
- Commencement notices (August 2018) up 20% year on year;
- New homes available for use (Q3 2018) up 20% year on year;
- Registrations (July 2018) up 7% year on year.
The Government continues to address affordability specifically. In particular, for those households earning low to moderate annual gross incomes (up to €50,000 for single applicants and €75,000 for dual applicants), a multi-stranded approach is being taken to the targeted delivery of affordable housing.
In order to support the affordable housing programmes of local authorities, the Government has committed €310 million, over the three years 2019 to 2021, under the Serviced Sites Fund (SSF) announced as part of Budget 2019. The funding is available for key facilitating infrastructure, on public lands, to support the provision of affordable homes to purchase or rent. I envisage a maximum amount of SSF funding of €50,000 per affordable home and on this basis at least 6,200 affordable homes could be facilitated.
A first call for proposals under the Fund issued to the four Dublin local authorities; Kildare, Meath, Wicklow, Louth and Cork County Councils, and Cork and Galway City Councils. Fifteen proposals were received, from nine of the local authorities targeted under this first call and I expect to announce funding decisions in relation to these applications shortly. I expect infrastructure works on approved projects to begin as soon as possible thereafter and delivery of affordable homes from late 2019/early 2020 onwards.
More broadly, all local authorities are carrying out economic assessments of the requirement for affordable housing in their areas and the viability to deliver such affordable housing from their sites. My Department hosted a workshop for local authorities on 8 November to discuss these issues.
A second call for proposals under the Fund will be made shortly. The scope of that call will be influenced by the information received from local authorities, as part of the aforementioned assessments, which they have been requested to submit by 30 November.
In terms of the type of affordable housing that will be delivered on local authority sites it may be affordable housing for purchase, for example, under the recently commenced provisions of Part 5 of the Housing (Miscellaneous Provisions) Act 2009, or cost rental, which is being advanced on a number of pilot sites before being rolled out further. The Regulations to support the operation of Part 5 will be finalised shortly. These initiatives complement other Government actions which help first-time buyers to buy a home, such as the Help to Buy Scheme and the Rebuilding Ireland Home Loan.
Finally, the new Land Development Agency (LDA) will contribute significantly to the delivery of affordable housing. All of the State land developed by the LDA will include 40% social and affordable homes to purchase or rent.