The collapse in property prices will cost housing minister Margaret Ritchie £200 million over the next two years, she has confirmed.
And in a move that may hit small building firms, the minister said she will have to reduce the money spent on maintenance work on Housing Executive homes as a result.
Ms Ritchie unveiled her budget plans for the next year and said earnings she hoped to make from property and land sales have plummeted\[Susan Penman\] as a result of the economic downturn.
Faced with a choice of funding maintenance contracts or meeting the urgent need to build new homes, she told the Assembly’s Committee for Social Development that she had opted to share |resources between the two areas.
“The impact of the economic crisis has been particularly severe on the housing budget, resulting in a collapse in capital receipts in ’08/09,” she said.
“And this is forecast to continue over the next two years.”The minister added: “I cannot over-state the seriousness of this situation ... I have considered a number of options but essentially the issue crystallises around whether to hold back on Housing Executive capital maintenance and improvement programmes, while keeping the new build programme credible.
"Or sustaining the Housing Executive’s maintenance plans and leaving the new build programme desperately short of funding.
"I have chosen the former course, which essentially reduces expenditure on a range of programmes and supports expenditure on the social housing development programme in the region of our target for ’09/10, but that is excluding 400 from this year."
The minister said she would seek to protect the most vulnerable and would prioritise energy efficiency and fuel poverty, plus raise funding for the warm home scheme.
But she added: "However, after maintaining funding to address statutory requirements ... there will be little new money for multi-element improvement schemes, other capital works and private sector grants, or for new initiatives such as mortgage rescue."
Ms Ritchie said she would lobby the Finance Minister Nigel Dodds and her Executive colleagues, who meet today, to help prioritise housing needs.
She said: "I had said before that our goal must be to put housing on a firm financial footing and living hand-to-mouth, hoping for good outcomes in quarterly monitoring rounds, is totally unsatisfactory.
"I will therefore be trying to persuade the Executive, that is the cabinet, to look again at budget priorities."