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Dáil Éireann debate -
Wednesday, 30 Apr 1997

Vol. 478 No. 5

Written Answers. - House Prices.

Liam Fitzgerald

Question:

44 Mr. L. Fitzgerald asked the Minister for Finance his views on the inflationary element of house prices in the current house price market; and if he will make a statement on the matter. [11528/97]

The rate of house price inflation largely reflects very strong demand for housing which is itself related to the strong economic growth in recent years. Lower interest rates and the expectation that they will remain low, increased real disposable incomes and unprecedented employment growth have all contributed to the upward pressure on house prices. The changing demographic situation with more young people looking for housing has also had a role to play. These factors have fuelled the demand for houses, resulting in a rate of house price inflation which is currently considerably higher than the general inflation rate. It is to be expected that in a free market strong demand will translate into higher prices. Nevertheless, despite the fact that house prices are not included directly in the consumer price index, there are clear grounds for concern that persistent high house price inflation may generate inflationary pressures indirectly in other areas of the economy, and so the trend over the near future will require close attention.

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