|A system that creates an artificial scarcity of land coupled with shambolic planning is paid for very dearly by Irish house buyers |
Site costs exceed 40% of the average Irish house price, an increase of almost 30 percentage points on the pre-boom position. In Dublin that increases to 50%. Overall the Irish figures are grossly out of line with the rest of the developed world.
In the US land accounts for 20% of the total cost of a house. In Denmark the figure is similar while in Portugal the land factor drops to 15%
The Irish planning corruption tribunal, currently known as the Mahon Tribunal, was established in 1997, a few months after the current FF/PD coalition came to power.
It was set-up in response to serious allegations against the then Minister for Foreign Affairs Ray Burke who for many years had been linked with questionable planning decisions.
Wonder why sprawling Dublin is forecast to develop a footprint as expansive as that of Los Angeles even though it has 25% of the population of LA?
Could it be a result of a tradition of gombeen politicians genuflecting to property interests with planners unwilling to challenge them?
Ireland with a population of 4 million has a 4% urban density - one of Europe's lowest compared for example with France's 28%.
There are currently about 40,000 full time Irish farmers and Ireland is desperately short of land for building houses!!
Land close to Irish towns can make a €500,000 an acre or more for lucky farmers who are already getting more than two-thirds of their income in the form of direct subsidy payments from the European Union budget.
When land is rezoned by politicians for development, the value can jump by a multiple of 50 or more times, the agricultural value.
Should it surprise anyone that the system invites corruption and unreformed, it will continue to do so?
Farmers lucky to own land that is acquired for roadbuilding are also able to make a bonanza.
In 2001, the Irish Farmers' Association, then led by Tom Parlon, currently the President of the Progressive Democrats, forced the Government to agree to a compensation deal linked to the prevailing development value of land.
In December 2006, it was reported that up to €4.6bn of the €18.5bn of taxpayers' money that will be spent on new main roads over the next decade will go into the pockets of landowners.
Fred Barry, chief executive of the National Roads Authority is reported as saying that the increases in the cost of land for major roads projects as "disturbing".Land acquisition accounts for 23% of the cost of roads projects in Ireland, but just 12% in England, 10% in Denmark, 9.4% in Greece and 1% in Iceland. A further 2% of the €18.5bn provided in the Government's Transport 21 for road building over the next decade will go to archaeologists.
Six years ago, Taoiseach Bertie Ahern asked the Committee on the Constitution to examine the issue of the pricing of development land. In 2004, it concluded that Mr Justice Kenny's recommendation in 1973 that development land should be priced with a 25% mark-up on agricultural land prices, could be introduced by legislation, and without amending the Constitution.
So, after almost ten years of stories of endemic corruption and what changes have been made in the system that spawned it? ABSOLUTELY NOTHING!
The cost of the tribunal is an issue but as usual with politicians who lack the appetite to challenge vested interests, the most pertinent issue is conveniently ignored.
Are there journalists who can connect the dots rather than be led up the garden path?
Should it surprise that a country like Switzerland can prosper where real house prices have not increased since 1970? - see article linked to, directly below.
State of Chassis: Artificial restriction on land supply puts Ireland and UK at bottom of property league in Developed World; Irish urbanisation at 4% is among Europe's lowest
For more material on how the land development system logjam has given us the shambles at Dublin Airport and the back-of-an-envelope decentralisation plan see here:
Irish Economy 2006 and Future of the Celtic Tiger: Putting a brass knocker on a barn door!