Banks preventing people from buying houses, claim developers
on 03/11/2009 00:00:00
Representatives of the Irish Home Builders Association yesterday pointed the finger at restrictive lending practices and high regulatory costs for the major recession that has hit the sector."Banks are a closed shop for everybody," argued IHBA chairman, Dominic Doheny, who claimed the unwillingness of banks to lend to anyone other than civil servants would not be removed until NAMA was up and running and easier credit became available.
The Tullamore-based builder claimed his firm, John Flanagan & Sons, was now selling houses complete with fitted kitchens and soft furnishings for €240,000, when the same unfurnished units were fetching asking prices of €300,000 two years ago.
"We're selling under cost at the moment," he said.
The situation is Offaly is mirrored in Dublin where house prices have also been slashed, although buyers are largely restricted to those in safe secure employment.
Francis Rhatigan of Ellier Developments said the only people buying homes at the moment were first-time buyers who worked in the civil service.
The company, which is behind the extensive Dalriada estate at the foot of the Dublin mountains in Knocklyon, described sales in 2009 as "very quiet", despite the fact that two-bed duplexes in the complex have been reduced from €395,000 to €235,000 and three-bed houses have been cut from €585,000 to €410,000.
However, Mr Rhatigan said house prices could not fall any further as they had already reached a level which was unsustainable over any extended period.
He said that Ellier, like other rival construction firms, were now only building houses at a rate at which they know they would be sold.
Alex Brett of Maplewood Developments, which have been in business for over 30 years, echoed similar sentiments claiming the market is close to the bottom.
The company is behind the large scale Paddocks development in the new town of Adamstown in west Dublin.
Prices for its wide range of apartments, duplexes and semi-detached homes have fallen by 27%-43% on average over the past two years.
"We're pleased enough with our performance this year as there is a reasonable demand at that price level, mostly from first-time buyers," said Brett.
However, he warned that such demand was confined to people who could satisfy the lending institutions about their job security and that the situation would not improve until such lending practices were eased.