Budget 2023: Property developer Michael O’Flynn says concrete levy is ‘extraordinary’ decision by the Government
One of Ireland's leading property developers, Michael O'Flynn, described as “absolutely extraordinary” the Government decision to sanction a levy on concrete products.
Mr O'Flynn said his fear was that the new levy would further increase price pressure on house construction at a time the Government desperately needed to get as many houses delivered to the market as cost effectively as possible.
Under the Government plan to offset the huge costs of the mica redress scheme, some concrete products – including concrete blocks – will be subject to a new 10pc surcharge.
The levy is expected to remain in place for several years as the Government struggles to fund the mica redress scheme, which could cost between €3.6bn and €4bn by the time it is completed.
However, Mr O'Flynn said he was stunned by the Government move to impose a concrete levy, given its potential impact.
“I find it absolutely extraordinary,” he said. “My fear is that it will prove totally counter-productive in terms of the Government's own house construction priorities.”
Mr O'Flynn said the cost of the new levy would inevitably be passed by concrete manufacturers directly onto builders, who, in turn, will have no choice but to include it in the overall house costs.
He said builders are already struggling to cope with the impact of inflation over the past year and the alarming surge in the cost of virtually all raw materials involved in house construction.
“I just do not understand this measure. Why would they unfairly penalise an industry which is already dealing with cost issues? It just does not make sense to me.”
Mr O'Flynn said that, in his view, the Government should be focused on doing everything possible to help bring as many houses to the market as quickly as possible and as cost-effectively as possible.
Ireland's housing crisis is now so acute that the French Government even issued a travel advisory about the chronic lack of accommodation in this country.
Mr O'Flynn also warned that he does not anticipate the Irish property price spiral easing anytime soon as surging demand continues to outstrip supply.
“I see no good news in terms of property prices because input costs remain a major problem,” he said. “We simply don't have enough zoned land.
“We also have the impact of the Ukrainian war. It does not spell any good news on the cost side.” Mr O'Flynn said if land and construction costs continue to increase, both will have an inevitable ongoing impact on Irish house prices.
While housing completions are expected to be 400 units ahead of target this year, one consultant’s report predicted shortfalls of 2,000 units in 2023 and 1,450 in 2024.
The Government’s Housing for All plan targets 24,600 completions in 2022, 29,000 in 2023 and 33,450 in 2024.
Rising costs, planning delays, land issues and competition from apartment building are all affecting home deliveries.
Experts warned Ireland needs a minimum of 35,000 new homes each year for a decade to cope with housing needs.