Vol. 525 No. 3
289 Mr. Yates asked the Minister for the Environment and Local Government if his attention has been drawn to the fact that house prices in the Dublin area are now several times the gross average industrial wage; and the proposals he has to stabilise house prices. [24932/00]
The relationship between house prices and gross average industrial wages does not provide a reliable guide to trends in housing affordability, as it is also necessary to take account of changes in the income tax burden and mortgage interest rates. This applies whether generally or in relation to Dublin or any other area of the country. Analysis of housing affordability carried out on behalf of my Department on a national basis indicates that affordability of an average priced house for a household with two earners, on the average industrial and non-industrial wage respectively, has improved in recent years following a significant deterioration in affordability over the period 1993 to 1995.
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 also by demographic factors such as growth in the key household population age groups. The cornerstone of Government housing strategy is to increase supply to meet increased demand and to improve affordability, particularly for first time purchasers. The Government introduced a range of measures in Action on House Prices, April 1998, Action on the Housing Market, March 1999 and more recently in Action on Housing 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 and to improve affordability, particularly for first time purchasers, who benefit from exemptions and preferential rates of stamp duty. These measures are working as indicated by the increase in housing output by 20% since 1997. Moreover, recent data indicate a growing proportion of first time purchasers in the market.
Recent statistics also show a welcome moderating trend in house price increases. Provisional returns from lending institutions for the September 2000 quarter indicate that there has been a significant reduction in the level and rate of house price increases.
