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This was originally published on Rte.ie on Tuesday 29th October by Petula Martyn.
A survey by EY Ireland reveals over a third of respondents believe the availability of capital will prove to be a potential obstacle to financing activity in the construction of houses.
This is a concern given that the Central Bank has said that around 50,000 new homes need to be built every year between now and 2050, at a cost of €20 billion per year.
EY believes third-party equity will be needed if builders, developers, and construction firms are to access that funding.
"What we're finding is the €20 billion a year that's needed is going to have to come from a number of different capital sources, and that's not just banks, that's the ever increasing number of non-bank lenders, it's long term funders as well as equity," said David Martin, Capital and Debt Advisory Partner with EY Ireland.
More than 20 non-bank lenders have been operating in the Irish market for more than 10 years, but EY believes equity rather than debt could offer a solution in this area.
"There are some established equity providers in Ireland but given the sheer scale of the €20 billion that's required, we're going to have to see more international capital coming," Mr Martin said on Morning Ireland.
He cites Germany and the UK where residential developers are working with banks, non-bank lenders and equity providers, taking a collaborative approach.
"It's not just a question of debt versus equity or bank versus non-bank," he said, "it's a bit more nuanced, and getting a capital structure where you can get all of those parties working together to fund the development of houses.
"A number of our respondents still view the only source of capital as banks, whereas to fund that scale of investment, you need to be talking to all the different parties and getting capital from each one."
EY Ireland took the pulse of the real estate borrower market in the survey and found the mood music was much more positive this year compared to last year, with the general uptick in sentiment across most sectors.
"The most positive sector was the residential development sector with 51% expecting to see most activity here, but our response did note the challenge in raising equity in that space," Mr Martin said.
Listen to the full interview here.