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Michael McGrath reassures business chiefs after ratings agency’s housing warning

The Finance Minister has told executives of French companies active here that the housing crisis is being dealt with, despite “headwinds” due to rising costs, a labour shortage and planning bottlenecks.

Michael McGrath made the comments after rating agency DBRS warned “the housing affordability crisis could make the country a little less attractive to future foreign capital inflows” and could be exacerbated by rising construction costs.

Mr McGrath said the housing shortage was a “problem of success” and that the Government needs “a period of stability and delivery” to solve it.

He pointed to this week’s €1bn mini-budget of subsidies and breaks for developers, which has been paid for largely though departmental underspends.

“I would never understate, in any forum, the scale of the housing challenge we face. Now, it is a problem of success,” he told an event organised by the France Ireland Chamber of Commerce in Dublin.

“We just have a mismatch, at the moment, between supply and demand. 

“We have brought a lot of new schemes into being, we have changed a number of them, and now I think we need a period of stability and a period of delivery.

“The Government fully accepts the scale of the challenge. But it is a function of a very successful economy, a growing population, and we will do everything we possibly can to meet that challenge.”

Figures out this week show new dwelling completions in the first three months of 2023 were 19pc ahead of last year, with apartment building at an all-time high and completions topping more than 30,000 last year for the first time since the last financial crisis.

Commencements – which indicate the scale of future activity – were up by around two-thirds between February and March, according to Housing Agency figures.

But Goodbody chief economist Dermot O’Leary said the high costs of building are a “constraint” and said falling planning permissions indicate “progress may be stalling”. 

“Completions are likely to come in at circa 29,000 this year, but early indications suggest a decline in 2024. This leaves housing output substantially below housing requirements,” he said.

Mr McGrath said new measures announced – subsidies for cost rental apartments, a waiving of development levies for new builds and increased grants for renovating vacant and derelict properties – “will add further impetus to supply” and “improve affordability”. 


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