BANK of Ireland is putting 1,500 homes on the market and making €250m available for new house construction projects.

The country's largest bank, which yesterday announced its first six-month profit since the crash, revealed it will be selling the 1,500 houses – including repossessed homes – within months.

The sale of so many houses is sure to cause ripples in the property market which suffers from acute shortages in the capital as well as oversupply in many other areas of the country.

Only 5,400 homes were sold in the first three months of the year, so the bank's decision to sell so many properties in the coming months will have a relatively large impact on supply.

An initial €250m has been earmarked to lend to developers, chief executive Richie Boucher said yesterday.

But that pot of money for developers can be increased if there is demand from builders who also have cash themselves to put up for projects, he said.

The Government is also trying to meet demand with promises to stimulate supply and thereby cool the overheating property market but these plans have yet to translate into large numbers of homes.

Yesterday, Mr Boucher said lack of construction is only one part of the blockage in the housing market. He predicted sales of secondhand homes would increase following recent price increases, he said.

"Demand does attract supply," he said.

Controversially, around one in six of the houses to be sold has been been repossessed. In addition are so called voluntary sales of homes by borrowers in deep arrears, sales of buy- to-let properties in the hands of receivers and houses being completed in previously stalled development schemes.

Mr Boucher said he could not put a figure on how many new house-builds the bank could finance with its €250m fund. "We have a large fund of money, and we will let the builders talk for themselves," he said.

The bank's decision came on the same day that the SIPTU trade union set out a four-year plan it believes will solve the current social housing crisis and create 65,000 jobs.

SIPTU said its €3.7bn plan to resolve the housing crisis by 2018 would create 25,000 social housing units and create 65,000 construction jobs.

The paper written by the union's economist Marie Sherlock proposes that the funds are raised from the National Treasury Management Agency and loans from the Council of Europe and the European Investment Bank.

Earlier this week, AIB chief executive David Duffy said his bank was in discussions with developers about schemes that could add 5,000 new homes.

But Mr Duffy had warned that house buyers face up to four more years of shortages as supply lags behind demand for new homes.

The Department of Finance has identified a lack of start-up capital among builders as a major blockage in the system.

In an interview with the Irish Independent, Richie Boucher said some traditional family building firms in particular have emerged from the crash with cash.

Builders

"They have maybe some equity so we are working with them," he said.

Some developers are also being supported by outside equity providers, he said.

Builders, even those with money have become more conservative, he added.

Initially, many developers who have money are targeting smaller schemes, he said.

"What we see at the moment is a lot of in-fill type development. What will happen is those guys will make some money on that and have more equity to put into the next deal, but they will want to be careful as what was a dangerous feature last time around was that people bet the farm."

The need in Dublin alone for new houses is estimated to be as high as 10,000 new units per year.

The interventions by Bank of Ireland and AIB come after the National Asset Management Agency (NAMA) announced earlier this month that it was ready to build 3,000 homes and fund up to half of the country's housing needs over the next five years.

NAMA claims it has access to sites which can deliver 22,000 new houses and apartments over the next five years and it has committed to funding delivery of 4,500 by 2016.

Irish Independent