House building could fall dramatically below expectations next year, the Construction Industry Federation (CIF) warned yesterday.
Federation chief executive Liam Kelleher said that the group wants Minister for Finance Brian Cowen to cut the top rate of stamp duty from 9 per cent to 5 per cent and to link mortgage interest relief to European Central Bank rates in December's Budget.
The CIF said at the presentation of its annual review in Dublin that 65,000 new homes would be built in the Republic this year, while the number for next year could fall to 45,000, about 20,000 fewer than most other predictions and half the number completed in 2006.
Mr Kelleher argued that the the budgetary measures were needed to halt the flow of investment out of the industry and into overseas opportunities.
The CIF believes that, over the medium term, demand for new homes in the Republic will run at 65,000 a year.
Its director of housing, Hubert Fitzpatrick, warned yesterday that if completions slipped below this figure it would take time for the industry to get back up to the point where it would be able to meet this demand. "We're going to end up with an imbalance in supply and demand," he said.
CIF president Hank Fogarty said that the federation agreed with a Government forecast, published this week, that about 20,000 building workers would lose their jobs over the 2007 to 2009 period. That was based on 65,000 new homes being built next year.
However, Jim Power, chief economist with First Active, questioned the CIF's forecast. "If there are just 45,000 new house completions next year, that would actually send the economy into negative territory. I would see this as a warning shot at the Government ahead of the Budget."
Mr Power added that the general consensus that about 60,000 homes would be built in 2008 was more realistic. He pointed out that figures released yesterday (see panel) showed that the number of planning permissions for proposed new homes was up in the second half of this year.
However, the CIF argued that, since its members are at the industry's "coalface", it was better placed to predict the rate at which homes are being built in the Republic.
Developers built more than 88,000 new homes last year and the sector accounted for €19.5 billion of the €35.5 billion generated by construction. It was responsible for two-thirds of the 280,000 people employed in the industry.
Mr Fogarty said that the industry's non-residential sectors - public projects, commercial building, and repair, maintenance and improvement - would absorb some of the jobs lost in house construction.
The CIF wants the Government to borrow to ensure delivery of the €180 billion National Development Plan. "The time when you could fund capital expenditure from current revenues is effectively gone," Mr Kelleher said.
Almost 24,000 homes approved
Local authorities granted planning permission for almost 24,000 new homes during the three months ended June 30th, figures released by the Central Statistics Office (CSO) show.
The CSO said yesterday that the authorities granted permission for 23,988 new homes during the period.
This was 25.6 per cent up on the 19,097 permissions granted during the same three months in 2006. The total was made up of 18,201 new homes and 5,787 new apartments.
The figures show that 4,684 applications to build once-off houses - single homes generally built on family properties in rural Ireland - had been successful.
That figure was 19.5 per cent - close to one in five - of the total.
The CSO also said that planning permissions for new farm buildings increased during the second quarter of this year to 4,065, compared with 960 during the same period in 2006.
