Local authorities should cut the development levies for house building if they want to boost the supply of new homes, Charles Gallagher, head of construction group Abbey, warned yesterday.

The company reported pre-tax profits of €24.1 million for the 12 months ended April 30th, up from €11.3 million in 2013.

After a tax charge of €5.3 million the group made a profit of €18.7 million and delivered earnings per share of 87.04 cent.

Speaking after Abbey published its results yesterday, Mr Gallagher acknowledged that house prices in the Republic began to “firm up” in the second half of 2013, particularly in popular areas of Dublin.

Supply squeeze

He said that a number of measures were needed to tackle the squeeze in the supply of homes, including cutting costs for builders by reducing charges imposed on them.

Mr Gallagher argued that levies and contributions that have to be paid to county and city councils are running at €15,000 to €20,000 per unit and have not come down since the height of the last decade’s property bubble.

“The officials need to get real,” he said. “Contributions were ramped up during the boom, which was fair enough as it was one way of taxing the gains that were being made, but the market has changed since then.”

Abbey said the outlook for the current year is “encouraging”, adding that it is budgeting for a significant increase in activity.