Cork developer: Housing crisis a threat to creation and location of jobs
The housing crisis is now a threat to the creation and location of jobs, one of the country’s largest developers has warned.
Michael O’Flynn, chief executive and chairman of the O’Flynn Group, said against the backdrop of a chronic lack of housing supply, potential investors are concerned about where their employees are going to live, and whether they will be able to afford to rent or buy property.
He said Government policies to deliver an immediate housing supply solution are needed — not long-term strategies like its €1bn Land Development Agency which could take a decade to deliver.
“In my 40 years in house building, this is as bad as I’ve seen it,” he said.
If we continue hoping it’s going to go away, or have long-term strategic plans, I think we are in a very dangerous place because it’s now affecting jobs, it’s now affecting the location of jobs.
“People making decisions about locating industry are very concerned about Ireland as a whole — where can their people live and can they live at an affordable price or are they consigned to renting?
“You have people who are renting that should be buying and people who are being pushed from renting into social, and I dare say from social beyond. People are paying more in rent than they’d pay on a mortgage — and that makes no sense.
“We’ve quite a problem housing area. [Housing Minister] Eoghan Murphy can’t fix it overnight, but we have to have policies and solutions that have an immediate effect.”
Mr O’Flynn was speaking at a housing conference in Cork hosted by PJ O’Driscoll & Sons law firm. It was told that by 2020, housing supply is expected to be in the region of 27,000 units, but the underlying demand is for 35,000 units per annum.
Mr O’Flynn said even if the Land Development Agency supplies the number of houses suggested, it will still only be a fraction of what’s needed.
While supportive of its objectives, he warned that its powers, including the ability to use compulsory purchase orders on private land, raises State-aid concerns and its activities could actually compete with private developers and affect their ability to raise funding.
He said the cost of development land, and the cost of building on it to provide houses at an affordable price, has to be addressed.
Developers, he said, can’t supply housing unless they can achieve a 15% profit margin because of the “risks involved in housing”.
And if we can’t have a 15% profit margin, we can’t supply, and if we’re supplying a product that people can’t afford, well that means housing isn’t viable.
While the budget can address Vat issues, fundamental changes to the bigger issues, such as development levies, Part 5 requirements, and the cost of land itself, are required, he said.
Elaine O’Driscoll, managing partner with PJ O’Driscoll & Sons, said it is time for policymakers to consider new laws to deliver “powerful solutions”.
“These solutions may involve interfering with individual rights in the common good. If that is to happen, it must be done with fairness and transparency,” she said.
