Sir,– The country faces a housing crisis of unprecedented proportions. The consensus view is that at current levels of progress, the crisis could be with us for 10 years. Minister for Housing Eoghan Murphy confesses to being embarrassed by the crisis; a curious comment given his position.
One is entitled to ask what exactly is the cause of his embarrassment?
Is it because he feels helpless in the face of the problem given the inadequacy of the Government response?
While Mr Murphy squirms, Taoiseach Leo Varadkar expresses his determination that the Government will have enough money to cut income taxes in the October budget with a view to increasing the take-home pay of people who “get up every day” for work. Is a cut in personal taxation so critical at this juncture?
I accept the Government has a plan for the “housing crisis”. The point is, however, that the plan is inadequate. It needs to be beefed up and that will require serious funding.
The reality is that the Taoiseach is seeking to prioritise tax cuts at the expense of families, including children, and ultimately at considerable cost to the wellbeing of Irish society.
Of all the problems the country faces, housing is one which we know how to solve. The State has embarked on ambitious housing programmes in the past. Why not now? – Yours, etc,
LEO ROCHE,
Rathmines,
Dublin 6.
Sir, – Your coverage of the property website Daft.ie report on the housing market makes for interesting reading ("House prices to rise for up to 10 years, property report says", June 30th).
In it you suggest that “the warning comes as the Government has ordered an investigation into the cost of building homes across Europe because it does not accept claims from construction groups that developers need more State money to help solve the housing crisis.”
So a benchmarking-style exercise is to be used by the Government to challenge claims by developers that they need further incentives from the State to build houses.
I suggest that it might also be useful for the Government to investigate the market structure that typifies the construction industry. The Irish construction industry consists of a few very large firms.
In the UK, government support in the form of help-to-buy policy has helped the five largest construction groups amass £8.2 billion in pretax profits. In an extreme example, the chief executive of Persimmon is due a £100 million payout for a share-option plan, and the company’s chief executives have been paid more than £70 million in the past four years in the light of a doubling of its share price.
The Irish Government’s support in the form of VAT reductions and the equity-to-loan scheme (help-to-buy) will, in a monopolistic market structure, boost company operating profits and not necessarily increase supply of housing.
It is not surprising, therefore, that house builders are lobbying the Government for reductions in VAT and other incentives.
After all, when a few large firms control supply, further cost reductions simply boost profits. – Yours, etc,
THOMAS POWER,
Lecturer in Economics
and Finance,
Faculty of Engineering
and the Built Environment,
Dublin Institute
of Technology,
Dublin 1.