When housing affordability becomes a problem, low and middle-income families are excluded from the market. The obvious answer is to build more homes and force down prices. Because of political pressure and a short election cycle, however, governments reach for subsidies to bridge that price gap, thereby sustaining a dysfunctional market. Aside from delays caused by bureaucracy, available funding and local objections, the central impediment to a properly functioning market is the price of land. House prices and rents dropped precipitously following the financial crash, but prime development land retained much of its value as owners hunkered down and waited out the economic storm. Today, site prices in Dublin exceed Celtic Tiger levels and the Government is being forced to provide State-owned land at minimum prices to cater for demand. In an attempt to bring privately hoarded land into use, a vacant site charge of 3 per cent will rise to 7 per cent next year.
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