Written answers

Tuesday, 15 June 2021

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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76. To ask the Minister for Finance his assessment of access to capital in the site acquisition and housing construction market; the places in which bottlenecks exist; if he is satisfied with the financial instruments now in place; and if he will make a statement on the matter. [31585/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, housing is a key priority for Government. In Budget 2021, a record total of €3.3 billion was allocated towards housing, including an Exchequer allocation of €3.1 billion. The capital spending on housing for 2021 is 26 per cent higher than the previous year, and almost two-and a half times what it was in 2017, demonstrating the massive commitments Government has already made in the area of housing.

There are also significant non-fiscal constraints to achieving the desired level of output – a pandemic, labour shortages and material shortages. There are also skills shortages, which is why the Government is providing significant investment in skills and trades as announced last week in the Economic Recovery Plan.

The funding landscape for residential development remains challenging particularly outside the main urban areas and commuter belt where demand is less proven. Even within the main urban centres the availability of finance very much depends on the entity, their track record and their previous relationship with banks or alternative lenders. While there has been an increase in the funding options in the market over the last number of years, the onset of the global pandemic interrupted this trend. More recently, the announcement of some lenders exiting the Irish market has created further funding gaps.

To address these ongoing gaps, Home Building Finance Ireland has expanded its product offering to cater for schemes from 5 to 300 units across Ireland. It has also adopted a regional focus with a view to targeting those developers and regions where the availability of funding is even more limited.

Irish banks remain well capitalised and all funding metrics are substantially above minimum requirements which means they remain in a strong position to lend. Financial performance in Q1 2021 was positive across the three banks in which the State has a shareholding with stable loan volumes, no deterioration in asset quality and strong liquidity positions. Mortgage drawdowns for house purchase grew by 5% yoy in Q1 despite the public health restrictions that were in place. Despite the significant losses booked in 2020, the funding and capital positions of the banks remain significantly above regulatory minima leaving them well positioned to manage through the crisis and to support the recovering economy.

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