Can innovative financing mitigate housing market volatility, while ensuring project viability?

As home builders across Ireland continue to navigate changing government policies and inflating construction costs, our role as a non-bank lender is becoming ever more innovative and flexible, as the Lotus team works with project owners to design solutions that work in the current environment. 

Earlier this week MyHome.ie issued a report highlighting “significant dissatisfaction” with the government’s handling of the property market. The data revealed that only 5 percent of respondents believe the current State efforts are sufficient. This discontent is further demonstrated by a general fear about the future of Ireland’s housing market, with only 13 percent of those surveyed optimistic about 2024 being a favourable time for purchasing properties. These findings are worrying for consumers and the industry alike. For our part, we are working with development project owners to explore alternative financing avenues that can offer both stability and adaptability.

Adding to the current market pressures, Taoiseach Simon Harris’s pledge to construct 250,000 homes by 2030 has been met with skepticism. To be clear, the industry is confident of its ability to scale, given the right policies, but there is a ‘target fatigue’ that most likely reflects the current stage of the political cycle. Also, this ambitious target comes at a time when nearly half of the prospective buyers report that the ongoing cost of living crisis has led to them delaying their purchasing plans. This is particularly unhelp given the need for a secure pipeline for the industry of ‘ready’ buyers. 

You might have read research shared through the RTE Brainstorm platform this week, which highlights the disparity in construction cost estimates. According to this RTE Brainstorm analysis, the Society of Chartered Surveyors Ireland (SCSI) estimates the hard construction costs of a new 3-bedroom house at €224,730 nationally, which rises to €257,645 in the Greater Dublin Area (GDA). When additional expenses like land and design fees are included, these figures increase to €397,000 and €461,000 respectively, making affordability of the end product a challenge. Separately, the Department of Housing, Local Government and Heritage compile market data from competitive bids to build homes for local authorities, which show average ‘all in’ costs of €318,365 nationally and €392,975 in the GDA:

 “Manifestly, speculative developers and building contractors do not have the same cost base. Design and specification, procurement methods, site conditions and local markets all have an impact…” [you can read this research in full here ]. 

So, how can we help? Non-bank lenders like ourselves operate with an agility to respond to these market dynamics by working with development owners to design bespoke lending models on a project-by-project basis. The marketplace is tough right now, but demand continues to grow across all types and tenures of housing; if you have a project that requires a fresh financing approach, contact us to discuss your options.  

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group