Vol. 519 No. 7
14 Mr. Gilmore asked the Minister for the Environment and Local Government if his attention has been drawn to the recent comments made by a person (details supplied) that the price of housing is now the main financial obstacle to Irish emigrants returning to the State to work; the steps he intends to take to deal with this situation, in view of the implications for the economy; and if he will make a statement on the matter. [14664/00]
I and the Government fully recognise the difficulties created due to the level of house prices for all those seeking housing. House prices have increased due to increased demand which is fuelled by many factors, including strong economic growth, increasing employment, higher disposable incomes and low interest rates and by demographic factors, such as growth in the key household population age groups. The reversal of emigration trends in the mid 1990s to significant immigration has contributed to demand for housing and to house price increases in recent years.
Recent statistics show a welcome moderating trend in house price increases. My Department's house price statistics for the December quarter of 1999 show annual price increases for new and second hand houses on a national basis of 16% and 18%, respectively. This is well below the peaks of 26% and 37% recorded the year before.
That is no consolation to house buyers.
The Government introduced a range of measures in "Action on House Prices" in April 1998 and in "Action on the Housing Market" in March 1999 to accelerate the supply of housing, secure house price stabilisation, address affordability issues and bring balance to the market. A comprehensive range of initiatives has been implemented to increase supply. These measures are having a positive effect, as shown by the record housing output of more than 46,500 last year, which is up almost 10% on the year before.
Principal measures to increase supply include the serviced land initiative, the fast-tracking of key infrastructural projects to increase the supply of land for housing and measures to ensure better utilisation of housing land, such as the preparation of strategic planning guidelines for the greater Dublin residential area and promotion of higher densities at appropriate locations.
This is the same old guff. The Minister of State should tell Members to look at the replies to other similar questions.
A co-ordinating housing supply unit has also been established in my Department to drive and effectively deliver on the range of measures to maximise housing output and remove bottlenecks where demand is greatest.
Additional InformationMeasures introduced to improve affordability for lower income and first time purchasers include withdrawal of investor incentives, reduced stamp duty rates, improvements in the local authority shared ownership scheme and the introduction of the affordable housing scheme. The Planning and Development Bill, 1999, which is on Committee Stage, provides for the preparation of housing strategies by all local authorities and requires them to ensure that sufficient land is zoned for residential development.
It is generally accepted that house price increases are moderating. The measures implemented to date have been effective and will assist intending house purchasers, including returning Irish emigrants, in house purchase transactions. I have commissioned Peter Bacon and Associates, who are economic consultants, to undertake a general review of housing market developments, including developments in demand, supply and prices. I expect the report will be completed shortly and, along with an appropriate policy response it will be considered by the Government and soon as possible thereafter.
The most worrying aspect of the housing crisis is that the Minister of State and the Government are living in a state of delusion.
The Deputy should put a question to the Minister of State instead of making a statement.
Why is the Minister of State continuing to live in this state of delusion that prices are not increasing, the Government's policies are working and it will be all right on the night? Does he realise that house prices have almost doubled during his period in office, normal salary levels are no longer capable of enabling someone to buy or rent accommodation, as a representative of one of the banks stated recently, the measures he outlined have not worked and the Government's policies on housing are a failure and will have to be radically changed? Will he accept that while he is maintaining it is economic circumstances which have caused the increase in house prices, the increase will cause the economy to collapse?
The Deputy has far exceeded the minute allowed to him. I appeal to Members on all sides of the House to abide by the rules governing questions.
I and my colleagues in Government fully recognise the issues involved in the housing area and are deeply concerned about the escalation in house prices. We have put in place a wide range of measures to try to increase supply. The extent of these measures, which are beginning to take effect, is unprecedented in the history of social and private house building. The level of demand, which arises as a result of the tremendous growth in the economy, is enormous.
The statistics from which I quoted, and in respect of which I referred to "a moderation", represent the sum of the results received from all lending agencies. House prices are continuing to increase, but not at the level which obtained previously. The unpublished figures show that there was a reduction in some areas earlier in the year. However, I do not place any great faith in that.
We are anxious to stabilise house prices and we are continuing to devote our energies, resources and time to monitoring the situation and bringing forward initiatives which will further contribute to moderating the position. In that context, an increase in supply is required.
The Minister of State has exceeded the time limit.
The building industry is under tremendous pressure to deliver the number of houses required.
Does the Minister of State not understand that when he uses the word "moderating" in connection with house prices, he runs the risk of seriously misleading people? House prices are increasing every year and are cumulatively adding to the burden imposed on anyone who wants to purchase a house. The level of house prices is making it almost impossible for people to buy their own homes.
The Minister of State referred to market developments. Is it the case that he appointed consultants last March to review market developments? Is it also the case that he appointed, without inviting competitive tenders, the same consultant who prepared the two previous reports? Does he not think it unwise to ask the proposer of the original measures to provide an assessment of their success? The Minister of State is living in cloud cuckooland if he believes that this procedure will be successful.
I do not know whether the Deputy is seeking to attack the integrity of the consultant in question.
I am attacking the integrity of procedure employed by the Minister of State.
The consultant was initially appointed following the placing of public advertisements. He has been asked to review and monitor developments and provide an ongoing analysis of the housing market. He is doing this in consultation with the officials in my Department and he will be publishing his analysis in the near future. The Government will consider that analysis and the overall position before coming forward with further measures designed to contribute to increasing supply and lessening demand. One of the constraining factors—
We must proceed to Question No. 15.
The Minister of State has talked his way out of a tight spot yet again.
