Dáil Éireann debate -
Wednesday, 6 May 1998

Vol. 490 No. 5

Written Answers. - House Prices.

Ivor Callely

Question:

19 Mr. Callely asked the Minister for the Environment and Local Government if his attention has been drawn to the unique situation that prevails and the additional costs that exist for house purchasers, particularly young couples, purchasing their first home in Dublin city limits; if his attention has been drawn to the lack of new houses being built in the city limits; if he will review the first time buyer's grant criteria and other issues; and if he will make a statement on the matter. [9546/98]

Ruairí Quinn

Question:

27 Mr. Quinn asked the Minister for the Environment and Local Government when the Government will publish the Bacon report on house prices; and if he will make a statement on the matter. [9422/98]

Conor Lenihan

Question:

36 Mr. C. Lenihan asked the Minister for the Environment and Local Government the role he envisages for the private sector in terms of building further serviced sites to developmental stage in order to ease the housing crisis. [10484/98]

Bernard J. Durkan

Question:

64 Mr. Durkan asked the Minister for the Environment and Local Government the plans, if any, he has to meet the housing needs of those with incomes of less than £20,000 per annum; if his attention has been drawn to the fact that the prospects for these people are bleak; if he has attempted to identify the approximate number of first time house seekers in this income category; if he will consider requiring local authorities to make private sites available to qualified applicants; and if he will make a statement on the matter. [10490/98]

Bernard J. Durkan

Question:

231 Mr. Durkan asked the Minister for the Environment and Local Government his views on the need for immediate steps to deal with the housing crisis as it relates to persons with incomes of less than £30,000; and if he will make a statement on the matter. [10799/98]

Minister of State at the Department of the Environment and Local Government (Mr. Molloy)

I propose to take Questions Nos. 19, 27, 36, 64, and 231 together.

The consultant's report on the house price study, An Economic Assessment of Recent House Price Developments, was published on 23 April together with the Government's Action on House Prices, which sets out a balanced range of measures in response to the report. Copies of the report and Action on House Prices were circulated to all Oireachtas Members and are also available in the Oireachtas Library.

The consultant's report highlights the extent to which positive economic and demographic factors, reinforced by a number of additional factors such as investment demand for residential property and difficulties on the supply side, due to certain infrastructural constraints and the effect of stamp duty rates, have resulted in recent very high levels of house price increases.

The package of measures adopted by the Government involves a three pronged approach to increase the potential supply of housing, address factors causing overheating or distortions in the market, and improve the position of prospective first time buyers.

Measures to assist first time buyers form a key element of the package, including the increase in the income limit for the local authority shared ownership scheme to £20,000 for single income households, with corresponding increase for joint income households. The position of first time buyers will also be helped by removal of fiscal incentives to investors who were pricing low income buyers out of the market and by reductions in stamp duty rates, particularly at the lower house price levels. Stamp duty has been abolished on houses priced up to £60,000 and the rate on prices between £60,001 and £100,000 has been halved to 3 per cent, with reductions at all house price levels up to £500,000. The overall package of stamp duty reductions will improve mobility in the second hand house market and, as a result, increase the supply of these houses available to first time buyers.

The consultants did not recommend any change in relation to the £3,000 new house grant for first time buyers. The main thrust of their recommendations is towards removal of distortions in the market and, in present market circumstances, any increase in the new house grant would be likely to be absorbed in higher prices. It is not possible to quantify the precise number of prospective first time house buyers in any particular income category. I am confident that the measures now being taken will assist a significant number of lower income households in getting access to home ownership.

Measures to boost housing supply will also help first time buyers and dampen price increases by improving the balance between supply and demand. Allocations of the first £15 million tranche under the serviced land initiative to provide water and waste water services for some 45,100 additional housing sites were announced earlier this week. The Government has also decided to provide an extra £15 million to fund further releases under the serviced land initiative and a new provision of £5 million to help target areas where roads infrastructure is a constraint. This will bring to £35 million the total Exchequer funding available to provide services required to open up additional land for residential development and will result in overall investment by local authorities of over £85 million when development levies are taken into account. This investment will help significantly in addressing constraints on housing supply, particularly in the Dublin area. My Department will also be identifying water and sewerage schemes to open up land for residential development which might be suitable for execution by way of public-private partnership. The Irish Home Builders' Association has also been asked to bring forward proposals in this regard.

Other measures being taken to boost supply of housing include promotion of increased densities at appropriate locations and a temporary reduction for the next four years to 20 per cent of capital gains tax on disposal of serviced land zoned residential to encourage faster land release for residential development.

I believe that the balanced package of measures being implemented will help to dampen down house price increases, ensure continued accessibility to home ownership for lower and middle income groups and secure the long-term strength and stability of the housing market.