Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

273. To ask the Minister for Finance the extent to which the lending institutions are lending to the construction sector with particular reference to the urgent need to offset the housing crisis; and if he will make a statement on the matter. [10434/17]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Over the last number of years, the construction industry, like many parts of the economy, has gone through a period of deleveraging. According to the Central Bank's Credit, Money and Banking Statistics, outstanding loans have fallen from a peak of over €10.28 billion in December 2007 to €1.14 billion in September 2016. Although this process of deleveraging continues, the ongoing recovery in construction activity is evident in growth of new lending to Irish construction firms, which increased by 14 per cent in the year to the third quarter of 2016. Construction-related lending is in addition to that for the purposes of real estate, land and development activities, where total loans outstanding fell from a peak of €106 billion in September 2008 to €17.3 billion in September 2016.

In recognition of the need for the construction sector to move away from the former 100 per cent debt financing model and instead adopt a more appropriate risk-weighted model of funding, my Department has actively encouraged the development of alternative sources of development finance. ISIF, under the auspices of the NTMA, continues to explore ways of funding projects that will enhance the supply of housing. Currently Activate Capital, the joint venture between ISIF and KKR, is providing funding on a commercial basis to fund the development and construction of housing.

The availability of development finance alone will not be sufficient to encourage development unless projects are seen as commercially viable. As part of Rebuilding Ireland, the Action Plan for Housing and Homelessness, the Government has set out a comprehensive package of measures designed to address the structural constraints which continue to inhibit the viability of construction. These measures include the establishment of a Local Infrastructure Housing Activation Fund (LIHAF), the development of a fast-track planning approvals process for large scale developments and a commitment to undertake a root-and-branch review of the planning system.