Central Bank governor Gabriel Makhlouf has cast doubt on the Government housing policy while suggesting planning was the “number one” challenge.
Responding to reports that the Government is considering a move to ease lending restrictions on developers so they can invest more in housing, Mr Makhlouf said the Government should consider whether its many policies and interventions in the housing market are “mutually supportive” before introducing new ones.
“It’s obviously up to the Government to decide what policies it wants to put in place,” Mr Makhlouf said at the launch of the bank’s updated consumer protection code.
“My very strong advice to Government is that there are many interventions that they have already made, and are making, in the housing market, and my advice would be to take stock of all of those interventions, make sure they’re all mutually supportive of each other before introducing new ones,” he said.
Mr Makhlouf said the banks were “well capitalised” and “had the capacity to lend”.
“The number one issue in housing is planning. It’s absolutely planning. This is not a unique situation in Ireland, but planning is a problem,” he said.
“Changing the law is one thing, making sure that the new law is implemented well is as important as law itself,” he said in reference to the recently overhauled planning act.
But Minister for Housing James Browne disagreed with Mr Mahlouf’s comments and doubled down on his view that finance, and not planning, was the priority issue, particularly in relation to building apartments in Dublin.
He insisted that finance was “broken” and was not working, and the proof of that was the lack of apartments currently being built.
“Finance is a real issue for delivering housing in this country, certainly in the private sector. As a Government, we have to look at every measure possible that could be used to deliver that housing.
“The Government has stepped up to the mark, is delivering at least six and a half billion euros in capital funding this year, and I expect that will be exceeded.
“We need a multiple of that from the private sector to deliver housing, financing that is needed to deliver housing right across the country but importantly, large scale apartments in Dublin city centre.
The Government has been on the back foot since taking office over the slowdown in new home completions, which fell by 7 per cent to just over 30,000 last year.
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Mr Makhlouf is due to meet Mr Browne in the coming weeks to discuss Government housing policy.
On interest rates and the European Central Bank’s next move, Mr Makhlouf said the bank needed to be “pretty prudent and pretty cautious” about changes to its monetary policy stance when inflation was still above the European Central Bank’s (ECB) two per cent target and “when quite exceptional events are happening around the world which could have a direct effect on inflation”.
The ECB is expected to lower headline interest rates again next month but the euro zone’s flagging economy and the prospect of US tariffs makes the outlook uncertain.
He said the current period was characterised by extreme volatility and it was important that policymakers kept “a clear head”.
Mr Makhlouf said Ireland as a small, open economy had benefited greatly from increased global trade and now stood to lose out from greater trade fragmentation and tariffs.
He said recent warnings from the Economic and Social Research Institute (ESRI) and Minister for Finance Paschal Donohoe about the potential impact of tariffs on jobs and growth in the Irish economy were consistent with the regulator’s own assessment.
He warned the State’s reliance on corporation tax was a “weakness” and that the Government needed to broaden the tax base.
