Why Mayo's housing crisis is getting worse rather than better
‘No effort’ to address core issues behind the problem - claim
The housing crisis in Mayo continues to escalate due to a lack of supply, exorbitant rents and a failure to kick-start the construction sector.
The Connaught Telegraph can reveal that a number of developers across the county have been busy acquiring lands for suitable developments - but they are facing massive stumbling blocks in terms of the capital required to proceed with proposals that would help to meet the growing demands.
According to Daft.ie, 437 houses are currently on the market, a relatively small proportion of which are new-builds, while there are 31 rental properties available in a county with over 1,000 on the social housing waiting list.
In Castlebar alone, only five properties are available to rent, with three of them costing €1,600 per month, while 84 dwellings are available to purchase.
There is currently a limited number of new houses on the market in Castlebar, Cong, Westport and Ballyvary, the ones in the county town’s new estates being priced in the region of €450,000.
Local auctioneer firms have confirmed that the limited availability has led to surging costs, a situation that won't change without incentives to stimulate the building of new and affordable homes.
Leading auctioneer Brian Moran said there needs to be a complete rethink by the government in respect of the housing sector because young people simply cannot get onto the property ladder and this is having far-reaching implications.
"Our ministers and TDs need to start thinking outside the box because they will be ultimately judged on this issue.
"They need to be looking at tax breaks for both developers and new buyers."
A new house costing €400,000 is increased by a whopping €54,000 due to the 13.5% VAT rate. Buyers also face a stamp duty fee of one per cent while the price is further increased by a portion of the 7% tax levied on developers when acquiring the site in the first place.
Against this background, construction firms and investors are reluctant to take commercial risks and those who are prepared to do so must meet stiffer repayment fees from private funds as Irish banks are currently not lending significant amounts to the sector.
One prominent Mayo developer, who did not wish to be named at this time, stated: "The situation won't improve until serious efforts to deal with the prohibitive costs, most notably VAT, are made.
"That's the bottom line. It's also very wrong that we are being forced to look elsewhere than our own banks for loans."
A recent analysis by research professor Kieran McQuinn, published on the website of the Economic & Social Research Institute, pointed to the fact the slowdown in supply of housing is caused by 'the funding gap' - the difference between the actual amount of credit required to fund the construction of the required number of housing units and the actual amount of credit in the financial system.
This was clearly a signal to the government, to which Mr. McQuinn is now an advisor, to allow the banks to loosen the purse strings to allow developers build the houses that are needed to meet rising targets.