Mr. Pat Farrell:

It is a very good question that I am sure I will struggle to answer adequately. Only 20% of strategic housing developments submitted have not commenced. Sometimes there is a notion out there that this is where the problem is. We all know there is a viability issue. Let us go back a little bit. The political system in this country ordained that we should have densification. This is for very good reason because we cannot continue the sprawl we traditionally had. It is unsustainable from an infrastructure and transport point of view and with the onset of the climate change agenda. In bringing forward densification, there was a failure to adequately sell the concept. For example, there is almost a notion that apartment development is associated with institutional investment. In fact, apartment development is a direct consequence of densification policies that require building apartments to achieve certain densities on development lands in certain areas. This is the only way to achieve the density.

Unfortunately it is a fact, which I must admit I did not know until I became more involved in the industry, that apartments are much more expensive to build than houses and, therefore we have a significant viability issue with apartment development in the country. This is why in recent years apartments have not been viable for traditional first-time buyers. There are constraints of the amount they can borrow, which is reasonable and fair under Central Bank rules and I am not critical of it, and there is also the cost of these developments. There is a major viability issue with regard to people buying apartments. Apartments have been forward funded and forward purchased. This has not been a bad thing in its own right because it has provided supply for the rental market that otherwise would have had no new source of supply.

The Government has adopted two new initiatives. One is Project Tosaigh and the other is Croí Cónaithe. One intends to offer support by way of subsidy to allow people to be able to buy more apartments to tackle the viability issue. The other is to create collaboration with developers, such as through mechanism funding, to try to activate sites that are not being commenced because it does not make economic sense to develop them in the current cost environment. Perhaps I have not answered but I have explained the rationale.

Those two initiatives by the Government are an attempt to try to address that issue. Time will tell how successful they will be.