Dáil Éireann Debate, Thursday - 24 June 2021
2. Deputy Cian O'Callaghan asked the Minister for Housing, Local Government and Heritage his views on the latest CSO residential property price index report that shows that house prices have risen by 4.5% over the past year; and if he will make a statement on the matter. [34134/21]
View answerWhat is the Minister's response to the latest CSO residential property price index report showing that house prices have risen by 4.5% over the past year? The Tánaiste, who has made a lot of pronouncements on housing recently, defended these prices on the basis that price levels have not yet surpassed the Celtic tiger peak. What price levels does the Minister think would be acceptable?
The April 2021 price index released by the CSO shows in general a rising trend in house prices with some variations across areas and property type. These increases must be viewed in the context of the preceding year, which included national lockdowns and restrictions on movement, which impacted severely on the construction sector and our supply. Obviously, there has been a lot of pressure on the second-hand market and the ability of sellers and purchasers to engage in normal sales activity, including physical viewings. We had a situation that was far from ideal in respect of virtual viewings and biddings but those changes had to be made in the context of public health advice. The ongoing easing of Covid restrictions will support a full reopening of the housing market and a return to a more normal supply of properties for sale. This will impact positively on the rate of price increases. The wide range of actions set out in the programme for Government will continue to deliver increases in housing supply and affordable housing, which is a priority for me, despite the challenges presented by Covid and will support a moderation in house prices.
The new housing plan entitled housing for all, which I will publish in the coming weeks, will set out a whole-of-government approach to outline how we get to a housing system that gives us sustainable supply at a price people can afford with appropriate housing options, particularly for the most vulnerable. We will bring the Affordable Housing Bill, which has passed the Seanad, into the Dáil for Second Stage later. This is the most comprehensive affordable housing legislation ever published by any Government. In particular, this Bill will help those in the unaffordability trap.
I would like to hear if the Minister has a view on price levels or if housing for all will set targets. In the past week, a house in Rathmines in poor condition and in need of significant renovation has attracted a bidding war with offers in excess of €530,000 above the asking price. These kind of bidding wars create huge anxiety and fear in prospective first-time buyers and have not been seen since the Celtic tiger years. Housing utility costs are 78% higher here than the EU average and Dublin has the second highest house prices in the eurozone. Prices are only higher in Luxembourg. The typical age of a joint purchaser has risen to 38 and the typical age of a single purchaser has risen to 42. Even the report of the Government's sub-committee on housing has warned that demand-side measures could add to this so I am asking the Minister what kind of price levels he thinks are acceptable.
The measures I have brought forward in the Affordable Housing Bill and housing for all are supply-side measures because we need to get supply up to at least an average of 33,000 per year. Last year, there were just over 20,000 completions. This year, on the best projections we have so far, there will probably be up to 18,000. The reality is that when the market, production and capacity are constrained, there is additional pressure on the second-hand homes market in particular. The Deputy referred to the bidding war relating to the house in Rathmines, which I watched myself. The bids are approximately €500,000 over the original asking price. That is not sustainable and is not something I want to see but we are in an unusual position where we are coming through post Covid and are building up capacity in the sector. There are also some cost implications and cost increases in materials and labour that I hope will be temporary.
Will there be targets for price levels in housing for all or does the Minister and Government have a view on that? There are only 7,000 or 8,000 new build homes available on the open market each year. The rest are bought by institutions or for one-off houses or social housing. In the context of some of the highest house prices in the eurozone, the warnings that prices could reach Celtic tiger levels, the sharp increases in the cost of construction building materials mentioned by the Minister and the warnings from the Central Bank and the ESRI about adding a demand-side shared equity scheme to this and adding fuel to the fire, will he reconsider those measures that will increase house prices even further given the pressure at the moment, bearing in mind the fact that the people who lobbied for that scheme did it at a time house price inflation was much more stable?
This Government believes in home ownership. In his earlier contribution, the Deputy bemoaned the fact that the average age of someone buying his or her first home has increased to 38. I have been raising this issue for a number of years but the difference is that we are doing something about it. A shared equity scheme is part of the Affordable Housing Bill, which will come to the House this evening and which I hope the Social Democrats will support. This shared equity scheme is focused on those who need it most. It will work. It has been passed by the Central Bank, has received approval and will help those caught in an affordability trap by helping them bridge that affordability gap with the State taking equity in their home. The State will take equity in direct build affordable homes built through local authorities such as the scheme in Donabate of more than 1,200 homes, 200 of which are social and 238 of which are affordable, passed by Fingal County Council a number of weeks ago but which the Deputy's party voted against.
