Construction BUSINESS

The results show that there is clearly a need for a sensible adjustment of the Central Bank mortgage rules as an astonishing 96% of developers said the new Central Bank regulations will have a negative impact over the next two years, according to the inaugural Knight Frank New Homes Construction Survey.

Knight Frank are seeing that first-time buyers are being pushed out to the regions as they are unable to afford the deposit for a 3-bed semi-detached within the M50 due to the new Central Bank criteria.

The knock-on effect of this leads to urban sprawl, putting additional strain on our public transport system.

Furthermore, while the regulations have had the effect of reducing house price inflation, with the Knight Frank Prime Index showing Dublin price inflation running at 1.2% per annum, they have contributed to furthering rental inflation, with annual prime rental inflation in Dublin now at 8.8%.

However, the developers also used the survey to vent frustration at the planning system, with 98 per cent finding building regulations introduced in recent years as “challenging” to building activity, while 67 per cent of builders see the planning system as “inefficient”.

One developer commented:

“I think that the Government needs to look at the amount that goes in planning contributions and VAT. On a typical three-bed semi in Dublin that would sell for €300,000, approximately €90,000 goes to government or semi-state bodies.”

However, the results also show that reviews of existing policies can have a beneficial effect on construction, with over 60% of respondents stating that the reform of the Part V regulations (this made it mandatory for developers to set aside up to 10 per cent of new developments for social use) have had a significant impact on activity.

Some 75 per cent of the developers surveyed operate in the Dublin area with a further 16 per cent operating in Leinster. Five per cent worked in Munster and 2 per cent in Connaught.