Before June 1997, when Fianna Fáil and the Progressive Democrats formed a Government, the average price of a new house was just under €100,000. Three weeks ago the Permanent TSB survey of house prices showed that the average price had broken through the €200,000 barrier for the first time. That is an increase of more than 100%, four times the rate of inflation, three times the rate of increase in average earnings and more than twice the increase in the cost of building index.
Those are the figures for the country as a whole. In the larger urban centres, the increase in house prices has been even more dramatic. In Dublin the average price of a new house has increased from €124,000 to more than €300,000 in the five and a half years of the Fianna Fáil-Progressive Democrats Government.
That is not all. As average prices have increased, the average size of a new house has diminished. An article by Donal Buckley in the current edition of Housing Times, which is published by HomeBond, adds a new dimension to the house price issue: “One of the ways in which builders have curtailed the growth in new house prices has been by reducing the floor space in new homes on the Dublin market”. Referring to both Dublin and the rest of the country, he says, “In both markets, apartments, which are generally smaller in size, are increasing their share of the market”. Later in the same article, he tells us:
In 1998, houses in the 90 – 125 sq. m. category accounted for 71% of all Dublin houses being built and 61% of country houses. However, in the last few years in Dublin this category has been pared back to 51% of a larger market.
In other words, after five and a half years of Fianna Fáil and the Progressive Democrats the house buyer is paying more than twice the price for a much smaller dwelling.
Inevitably, thousands of families on good modest incomes have been priced out of the housing market. This is acknowledged by those who work in the market. The Property Review 2002-2003 recently published by Lisney states, "Many first time buyers have been priced out of the Dublin market altogether and counties like Wicklow, Kildare, Meath and Louth have seen a dramatic increase in starter home sales".
The Minister of State with responsibility for housing, Deputy Noel Ahern, seems to have difficulty in grasping this message. On Question Time on 28 November last, he offered us the following ministerial perspective on house prices: "I believe that people on good incomes will have no difficulty buying homes for themselves". He declined to define "a good income" but went on to explain, "I am simply saying that somehow or other, these people – I have heard Deputy Gilmore's comment previously about the garda and the nurse and so on – seem to manage".
In case we think the Minister was caught momentarily off balance in a robust Dáil exchange, these comments repeat almost verbatim his interview in the current issue of Cornerstone, the magazine of the Homeless Agency. The article states:
Noel Ahern questioned some of the stories about affordability. "I hear an awful lot about the nurse and the doctor and the nurse and the guard who can't afford to buy a house. Yet I see them out there and they seem to be doing it. Expectations have gone through the roof".
So now we have it. The aspirations of the young working couple to buy their own home is considered by the Minister of State with responsibility for housing to be an expectation too far.
The Minister of State does not have to rely on stories he is hearing or on what I say to conclude that home ownership has now been put beyond the reach of a huge chunk of young people by the Government in which he serves. There is now an official measure of housing affordability. It is defined in the Planning and Development Act, 2000. Using that measure, each local authority last year drew up a housing strategy in which it estimated the number of newly forming households that can not afford to buy their own home over the next five years.
The Minister of State has to date not published the aggregate results of the housing strategies. However, four agencies, Focus Ireland, the Simon Community of Ireland, the Society of St. Vincent de Paul and Threshold, have together independently analysed the housing strategies and, in the report which they published last month entitled, Housing – Access for All, they concluded that: "It is projected that 33% of new households will not be able to afford to become home owners, based on the calculations prescribed under Part V; that figure rises to 42% in urban areas". We know that in Dublin it is almost 50%.
The greatest change in society brought about by the Fianna Fáil-PD Government concerns home ownership. In its five and a half year reign and, amazingly, during the period of our country's greatest economic success, it has changed housing tenure from the normality of home ownership to one where anything between one third and half of new households are priced out of owning their own home. This is the Government which has put home ownership beyond the reach of working people. The enormous implications of this for public housing policy and society have not yet been fully grasped by the Government.
The immediate consequence has been a dramatic increase in private renting. In 1997 there were approximately 135,000 private rented tenancies. Today there are about 200,000. Like house prices, rents have also shot up. There are no official figures for rent levels, but most commentators agree that a family sized unit which would have been rented for €500 to €600 per month in 1997 would now cost between €1,200 and €1,500 per month.
The Minister, Deputy Cullen, seems to favour the shift from home ownership to renting, and in a recent radio debate with me he drew attention to the norm on the continental mainland where people rent rather than buy their homes. He omitted to state that in other European countries tenants enjoy legal rights and security of tenure which do not apply here. In Ireland there are no controls on rent increases and no security of tenure for the vast majority of tenants.
In 1999, the then Minister of State, Bobby Molloy, established the Commission on the Private Rented Sector. It reported in July 2000 and recommended a number of modest reforms, some of which were tax-friendly for landlords and some of which required legislation to protect the rights of tenants. The Government has already implemented the recommendations which benefit landlords, but two and a half years after the publication of the report, it has still not published the Bill to give tenants some minimum legal rights. Meanwhile, thousands of tenants have been evicted over the past five years and many are still subjected to arbitrary and unfair treatment and to poor housing conditions. Threshold states that in the first nine months of this year alone, it dealt with 2,720 queries about conditions in private rented dwellings, including 83 queries concerning infestation of rats and 242 queries concerning non-compliance with legal minimum physical standards.
Evictions from private rented accommodation have contributed to the growth in homelessness, which Focus Ireland now estimates to be about 6,000. Mary Higgins, director of the Homeless Agency, writing in Cornerstone this month, points out the number of families and couples who are homeless in the Eastern Regional Health Authority area has increased from 1,290 in 1999 to 1,470 this year, an increase of 14%. These households account for a staggering 1,200 children who will be homeless this Christmas and staying in temporary and emergency accommodation in bed and breakfasts and shelters around the city. These are the forgotten children of a newly affluent society, which is now ruled by an uncaring Government. The growth in homelessness and the length of time which families have to spend in bed and breakfasts and temporary accommodation is directly related to the Government's failure to deliver on its social housing commitments.
In June 1997, when the Fianna Fáil and Progressive Democrats Government was elected, there were 26,000 applicants seeking local authority housing. The assessment of housing needs, published in March 2002, shows this number has now increased to more than 48,000. Indeed, if those who are seeking shared ownership, larger accommodation and traveller accommodation are added, the real estimate of housing need is closer to 60,000.
In the PPF agreement, about which we hear much these days, the Government undertook to deliver an additional 25,000 local authority houses between 2002 and 2003. At best, only 15,000 of those houses will have been delivered by the end of the programme. Some 2,204 were built in 2000 and 3,622 in 2001. It is estimated 5,000 will be built in 2002 and 4,000 in 2003. The performance is even worse when compared with the targets set in the NDP. This anticipated the production of approximately 350,000 housing units between 2000 and 2006, a target which will probably be achieved, but of which just 50,000 were to be social housing units. However, more than half way into the seven-year life of the NDP, only 15,000 of the 50,000 social houses promised will have been delivered.
The human consequences of this failure by Government visit all of us at our constituency clinics every week where we meet young families on low incomes living in overcrowded, stressful and unhealthy conditions, either with an extended family or in unsuitable and over-priced private rented accommodation. Every week, these people are suffering for the failure of Government housing policy.
Given the overall scale of the housing crisis, one would have expected a newly re-elected Government, which cared at all about the needs of the people, to come back with some fresh thinking or some new policies to tackle this seemingly intractable problem. Instead, the re-elected Fianna Fáil-Progressive Democrats Government has made it worse. In July it instructed local authorities to discontinue turnkey developments. These were arrangements which were being made by some councils with private developers for the purchase of schemes of houses for social housing purposes. It was estimated that approximately 1,000 of this years 5,000 output would be met by turnkey houses.
At the same time the Government introduced a new requirement for the approval of tenders, after they had been accepted by local authorities, the effect of which is to discourage builders from tendering for local authority housing contracts. These, of course, in the language of the Taoiseach were not cuts at all, but merely adjustments. However, in the Book of Estimates which was published in November there could be no disguising the cut. The Exchequer provision for social housing will be 5% less in 2003 than in 2002, and when construction inflation is taken into account, the real cut is about 15%. The Minister, Deputy Cullen, and the Minister of State, Deputy Noel Ahern, have attempted to argue this is not a cut at all, that councils can use their own resources, tenders will be lower, or something will somehow turn up. However, the give-away is contained in reply to a parliamentary question on 28 November in which the Minister of State, Deputy Noel Ahern, stated "I expect that local authorities will complete or acquire some 5,500 houses in 2002 and approximately 4,000 in 2003". If the projected number of houses for next year is 1,500 less than this year, then what is that if it is not a cut? These cuts were followed by the abolition of the first-time buyer's grant, which will immediately make it €3,810 more expensive to buy and will tilt the balance in the market even more in favour of investors who were already given a leg up in the December 2001 budget which changed their stamp duty and interest reliefs.
The Government's attempt in the budget to soften the blow by increasing mortgage interest relief, worth about €350, was cynical because the increase in VAT on new homes has taken away six times more from the first-time buyers than they will get back in interest relief. The combined effect of the abolition of the first-time buyer's grant and the increased VAT is to add almost €6,000 to the price of a new house. Up to now, the Government could plead a defence of helplessness, or even unwillingness to intervene in the housing market to calm house prices, but that is no longer true. This is the first time that Government action has directly increased the price of houses for first-time buyers.
The Dáil has the power to annul the regulation abolishing the first-time buyer's grant. On behalf of the Labour Party and on behalf of all the first-time buyers who will be affected by the abolition of the grant, I am calling on every Deputy in this House, including those on the Fianna Fáil and Progressive Democrats benches who have criticised the abolition of the grant, to vote for its retention when the vote on this motion is taken tomorrow.
I also call on members of the House to vote to annul the new regulations on rent allowances. The new regulations represent the most savage and cynical cut inflicted on poor people by this Government. The regulations increase the minimum personal contribution for rent by €4.38, from €7.62 to €12, which immediately reduces the nominal budget social welfare increase of €6 to a net €1.62 for people on supplementary welfare and on basic social welfare payments. It caps the maximum rent allowance which may be paid by a health board, thus exposing poor tenants to the full financial force of the new rent increases. It actually prevents rent allowance being paid at all to a tenant where the rent exceeds the maximum allowance payable, a point to which I drew the attention of the Minister for Social and Family Affairs during the debate on the Social Welfare Bill. These regulations will result in increased evictions and homelessness, and will deepen poverty for those who are already poor. They should be rejected by the House.
Over the past five years, as the housing crisis has worsened, the Labour Party has proposed a range of possible solutions including the assembling of public land banks and the windfall taxing of rezoning profits to curb speculation and profiteering in building land; the establishment of a national housing authority to drive the provision of affordable housing; the introduction of legislation to give tenants basic rights; the introduction of consumer protection legislation; the appointment of a housing market regulator to protect those buying their homes; the widening of social housing provision; the introduction of a new housing benefit; and the implementation of the integrated strategy on homelessness.
This re-elected Fianna Fáil – Progressive Democrats Government seems even less willing to take Labour's proposals on board. Does it now have a housing policy at all? Let us hear again from the Minister with responsibility for housing, Deputy Noel Ahern. Pressed during Question Time in the Dáil on 28 November, he offered the following solution to the housing crisis:
I accept that there are pressures and, because of these, the Department and successive Governments have tried to help people who are caught in the limbo to which I refer by introducing measures such as the affordable housing scheme. On that day, the way of the future was to be the affordable housing scheme. Five days later, in a most disgraceful surrender to the construction lobby, the Government effectively abolished the affordable housing scheme. It is now rushing legislation through the House, which will give back 16,000 social housing sites to private builders. So much for the Minister's solution to the housing crisis. If this Government has a policy on housing, it is one which favours the investor over the first-time buyer, the landlord over the tenant and the land speculator over the family in need of housing.
