New house starts are continuing to decline sharply in Dublin and other major cities despite Government measures to boost the supply of starter homes.
Figures to be published shortly by HomeBond, the national house guarantee scheme, will show that there has been a 40 per cent fall-off in new house starts in Dublin city and county during February compared to the same month last year. The slowdown was also evident in Cork, Galway, Limerick and Waterford, where there was 20 per cent less activity than a year ago.
The reduced level of housebuilding has been evident for the past six months, according to the Irish Homebuilders Association (IHBA), but the combined figures for January and February suggest a worsening of the problem. New housing starts in Dublin city and county in the first two months of this year were almost 35 per cent down on 2000, while the figures for the provincial cities were 39 per cent lower.
New starts and registrations usually provide an accurate picture of the supply position on housing sites. If the stock of starter homes coming on the market drops as significantly as HomeBond suggests, then there is every possibility of another round of price increases.
The Department of the Environment says the differential between the two years is explained by the fact that there was an exceptionally high level of registrations in the early months of 2000 because of administrative changes.
However, Ciaran Ryan, director of the IHBA, argues that they are comparing like with like. He says it is quite obvious the downward spiral will mean that only about 42,000 new homes will be completed this year, as against 47,000 in 2000.
"After three Bacon reports the market is screwed up and the decline will continue as long as we have conflicting government policies that are not working."
While the housebuilders continue to reiterate the reasons for the slowdown - disallowing mortgage interest relief on residential investments, taking 20 per cent of sites for social housing and imposing a two-year time frame on planning permissions - the reality is that most builders can afford to bide their time in the hope that the Government will eventually row back on at least some of its policies.
Ken MacDonald of agents Hooke and MacDonald said an immediate response from the Government to the stumbling blocks in the market-place would reverse the decline in housebuilding. Otherwise, the difficulties being experienced by first-time buyers and the rental population would continue to get considerably worse.
