Bernard J. Durkan
Question:124 Mr. Durkan asked the Minister for the Environment and Local Government his plans to resolve the housing situation within the foreseeable future; and if he will make a statement on the matter. [12983/03]
Other Questions. - Local Authority Housing.
The Government's strategy is to increase housing supply to meet demand and to improve affordability, particularly for first-time purchasers. There is clear evidence that the strategy is proving effective. Total new housing output in 2002 was 57,695 units, representing an increase of 9.7% on 2001 and the eighth consecutive year of record housing output. The effects of that increased output are reflected in moderating house price trends. Average year-on-year house price increases have been reduced from a peak of around 40% per annum in 1998 to the current more moderate levels.
When combined with Government measures and other factors, including high levels of economic growth, lower tax levels, increased disposable incomes, increased employment, lower mortgage interest rates and low inflation, that moderation in house price increases has impacted positively on housing affordability.
Local authority and voluntary housing programmes have been greatly expanded. Last year over 12,700 units of social and affordable housing were provided, compared with just short of 8,700 units in 2000. Local authority housing output of 5,074 units was achieved in 2002, and the voluntary housing sector continued to play an increasingly significant role in the provision of social housing, with output of 1,360 units, the highest level ever recorded. Activity is also increasing significantly under the affordable housing and shared ownership schemes. Eight hundred and eighty two affordable housing units were built in 2002, about three times the output in 2001, and 1,686 households benefited under the shared ownership scheme.
Demographic changes continue to drive the demand for housing, including social housing. The Government therefore remains committed to continuing measures to boost the supply of housing, seeking to bring moderation to the rate of house price increases and assist low income groups and those with social housing needs through the range of targeted social and affordable housing programmes.
Additional Information.
Total capital funding for housing this year –€1.7 billion – is up almost 7% on the amount provided in 2002. It is anticipated that the funding will enable the needs of about 12,000 households to be met this year. The provisions under Part V of the Planning and Development Act 2000, as amended, will assist in the delivery of social and affordable housing, and the housing initiative included in the new national partnership agreement Sustaining Progress also seeks to increase the supply of affordable housing.
The current level of public investment in housing is very significant, and the need to ensure that we are making best use of the available resources to meet housing needs is reflected in the new partnership agreement Sustaining Progress, which provides for a review of the effectiveness of programmes designed to assist low income groups, including those with social housing needs and special housing needs, such as elderly, disabled and homeless persons and Travellers. The Government will continue to monitor housing developments and review policies as necessary to ensure that the demand for housing is met in a sustainable manner.
I hate to be disrespectful, and I know that the Minister is a decent and honest man who expects the best from everyone and we expect the best from him, but the reply that he has read out is the greatest load of gobbledegook that I have heard since entering this House over 20 years ago. I do not think that the Minister disbelieves me. I think that he recognises what I am saying. Having regard to what he has just said, it would take about 20 years to surmount the country's present housing crisis, by which time it will have escalated even further. It will be completely out of reach. I ask him what action he can take to address a situation where, in my constituency, for instance, of all so-called affordable housing built, 60% is bought by investment houses and speculators. The figure is not 35% or 38%, but in some cases almost every two-bedroom or three-bedroom, semi-detached, standard house that comes on the market is bought by speculators.
What in God's name will the Minister do about this? The 5,000 people who were on the council housing list in my local authority area two years ago are still on it, with others joining them. What in heaven's name will the Minister do? Will he give some direction or instruction? I listened to the Minister of State on the radio the other night and was appalled by the apparent lack of knowledge regarding the true housing situation. What can the Minister do about it?
I disagree with the Deputy on one fundamental point in this debate. The whole problem that we had through consecutive Governments of recent years was that we were nowhere near supplying the demands of the marketplace. That is a fundamental issue. One can make every effort and engineer procedures, which can make an important contribution, but if one does not fulfil the basic principle of building enough houses to meet the demands of the people, one's efforts are as nothing.
We have had eight years of record housing output. We have reached a point, at around the 58,000 mark, where supply is meeting demand. Do not take my view or that of the Government, but independent commentators, lending institutions and the construction industry indicate that we have reached a situation where supply in the Irish market equals demand. Achieving that this year is not enough, we must sustain that level of house production in the marketplace over the next few years. As the Taoiseach has said on numerous occasions on the Order of Business, that is way ahead of what any other EU country is doing. Equally, over 12,000 units are being supplied to people in need of housing in this country through affordable housing schemes, social housing schemes and shared ownership schemes. Those are the facts, but the profile of the people has changed dramatically.
The Minister is showing a frightful level of complacency about this crisis. He talks of supply, but does he realise that 30% of houses being built are being snapped up by speculators and investors and that the ordinary man and woman in the street cannot afford a house? They were further insulted this week by the President of the Irish Auctioneers and Valuers Institute, who said that there had never been a better time to buy a house. That would be the case if one could afford to do so. People cannot afford houses, and young people's parents are going into hock to enable their children to buy houses. The Minister does not seem to realise that, for the first time ever, the number of applicants on the waiting list in Cork city has reached 4,000.
Is it not the case that because the Government screwed first-time buyers by the abolition of the first-time buyer's grant and the increase in VAT and gave a leg-up to investors through tax breaks and various incentives, while we are now producing more houses, we are producing them for moneyed people rather than for those who need them? I will ask the Minister a simple question. We have heard much over the past few days of the 57,000 houses built in this country last year, but how many of those houses were bought by first-time buyers?
That is the question.
I agree with the Minister on the point concerning supply and demand, but every step taken by the Government over the past few years has hindered supply. I fundamentally disagree with Part V of the Planning and Develop ment Act 2000 – the Minister's intervention caused the difficulty. I differ with some of my colleagues in that I believe that numbers were increased and that the Government introduced policies, but they were reversed and billions of pounds were drawn out of the economy as a result. I have one specific question concerning a matter that has come to my attention within the past few days. It has to do with a departmental circular, Circular 403, to local authorities. It is a draft circular which states that where there is any planning application for houses that will deliver five or more affordable houses to the local authority from private schemes the Department must vet that scheme. Will the Minister examine that, given that one of his stated policies is to bring houses on stream quickly? This is one more layer of bureaucracy. It is one more instance of interference by the Department in what should be a private industry. Circular 403 requires the Department to vet any application that will bring on stream five or more affordable houses. I do not like this prescriptive approach.
What does the Minister intend to do about the cartel of developers, the dirty dozen developers and speculators, who control the supply of building land in the greater Dublin area? These are among some of Fianna Fáil's biggest campaign contributors and they are artificially maintaining a high price for building land in Dublin. Not only that, they are allowing new housing onto the market in a drip-feed manner so as to sustain an artificially high price. What is the Minister and his party doing to reduce the price of housing and to break up the cartels that are among his party's largest contributors to its campaign coffers? What is the Minister going to do about that?
If the Minister is aware of the ongoing crisis in housing, particularly regarding the difficulties local authorities have in procuring land for housing, why is he allowing various Departments to sell off land that could be handed over to local authorities? The Department of Defence and other Departments have been selling off land to private developers instead of handing it over to local authorities to build houses, thereby solving one of the critical issues, that of land procurement for house building.
I make absolutely clear to everybody in this House the Government's commitment to the whole question of housing. It is based on one simple fact, the necessity to get supply up to the level of demand. The industry is at capacity. We have up to six years' serviced land available nationally and ten years' in Dublin. The industry and those in the housing market are building at absolute capacity at the moment. Any independent analysis would indicate that.
The houses are not getting to the market.
This year we expect house price inflation to be down to about 3-4% if it is not level after years of growth which was heated up by supply not being available to meet demand. There was a driven market which was driving demand and therefore driving the cost of houses. There is no question about that.
That is nonsense. It is going up every day.
It is driven up by the price of land.
Between Government and local authorities, there has been spending of €1.7 billion this year on all the elements of providing housing for those in the social and affordable housing category and in the shared ownership schemes. It is an unheard of and unprecedented amount of money and will have an enormous impact. More than 12,000 people will benefit from those schemes alone this year.
Twelve thousand buyers will benefit, as opposed to people, 12,000 investors.
Why distort demand?
I do not deny that we have not got to the end of this problem, but let us not send a message out of this House that we are still at a point of panic in the housing market. We are not.
(Interruptions).
We have increased housing supply to equal demand. Deputies should not drive up the cost of houses with the rhetoric coming from the opposite side of the House. That is the reality.
(Interruptions).
The Opposition does not like it when the Government is successful.