Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

Dáil Éireann díospóireacht -
Thursday, 16 Oct 2003

Vol. 572 No. 5

Other Questions Local Authority Housing. - House Prices.

Bernard J. Durkan

Ceist:

8 Mr. Durkan asked the Minister for the Environment Heritage and Local Government the action he proposes to take to address the increasingly urgent issue of the housing situation, with particular reference to first time home seekers on a county by county basis; and if he will make a statement on the matter. [23640/03]

Thomas P. Broughan

Ceist:

40 Mr. Broughan asked the Minister for the Environment Heritage and Local Government if his attention has been drawn to the fact that, while house prices have continued to spiral, the cost of building materials has increased by just 0.6% in the past 12 months; the steps being taken to ensure that builders or developers are not profiteering at the expense of house buyers; and if he will make a statement on the matter. [23571/03]

Thomas P. Broughan

Ceist:

44 Mr. Broughan asked the Minister for the Environment Heritage and Local Government the steps he plans to take to bring house prices under control having regard to the fact that prices for new and second hand houses have continued to rise at a rate well above the rate of inflation, and that the average price of a new house in Dublin has trebled since 1997; and if he will make a statement on the matter. [23570/03]

Bernard J. Durkan

Ceist:

189 Mr. Durkan asked the Minister for the Environment Heritage and Local Government the plans he has to tackle the housing problem; and if he will make a statement on the matter. [23776/03]

I propose to take Questions Nos. 8, 40, 44 and 189 together.

The unprecedented demand for housing, fuelled mainly by rapid economic growth and demographic changes, has been the major driver of house price increases in recent years, and increases in the cost of building materials are only one of a range of factors driving these increases. The Government's strategy is to increase housing supply to meet demand and to improve affordability, particularly for first time buyers, and in this way to seek to bring moderation to house price increases.

The measures introduced by this Government to boost supply, such as significant investment in infrastructure, removing planning constraints and promoting the increased residential densities, are having effect. Last year was the eighth successive year of record house completions, with 57,695 units completed, an increase in output of 9.7% on 2001, and an over 30% increase in the housing output in the Dublin area. Ireland is now building at the fastest rate in Europe, with close to 15 units per 1,000 population last year, which is an outstanding achievement. This positive trend in supply has continued into this year, with statistics showing that overall house completions for the first six months were up 16.5% on the same period last year. Completions in the greater Dublin area were up 10.6% while completions in Dublin were up 13.8%.

House price increases and the impact of these on affordability are a matter of continuing concern. While the rate of house price increases is still problematic, this has moderated considerably since the late 1990s, when price increases peaked at 40% per annum in 1998. In order to address problems associated with increases in price levels, the Government has worked to ensure the continuing enhancement of supply. At the same time, the Government is concerned to ensure that the broad spectrum of housing needs is met. Almost €3.8 billion was spent in the first three years of the national development plan on social and affordable housing measures, reflecting the strong commitment of the Government to meeting needs of low income groups and those with social and special housing needs.

The Government is committed to continuing with measures to boost the supply of housing and ensuring that the demand for housing is met in a sustainable manner. We will continue to monitor and review housing developments and policies as necessary, including examining possible measures aimed at moderating land costs for housing and other essential public infrastructure. Consideration of these issues will be finalised in light of the recommendations of the All-Party Oireachtas Committee on the Constitution, expected early next year, and the NESC report on housing and land policy, expected by year end.

Does the Minister of State recognise that he is attempting to delude himself and his listeners? He refers to statistics that no longer have any relevance. Does he recognise that the cost of building materials has had no impact on the rise in house prices?

The Minister of State has overlooked the needs of the first-time home buyer, who has been deprived of the first-time buyer's grant and hammered by VAT increases, development charges and stamp duty? Does he accept that in County Kildare, approximately 5,000 families have no hope of buying a house of their own in the present climate? This is not because of circumstances outside the control of the Minister of State, rather it is because he has failed to address the issue.

Will the Minister of State address the question of the huge take in tax, which is a cause of increased house prices? There have been also been huge increases in the takes from VAT, stamp duty and development levies. Will the Minister of State address that issue? That money is going into the Government's coffers. The maximum loan available to constituents of mine residing 20 miles from O'Connell Bridge is considerably less than that available to the Minister of State's constituents, even though houses are more expensive in my constituency. Will he offer a little hope to first-time buyers?

The emphasis of Government policy is to increase supply. Ten years ago an average of 21,000 houses were built annually, but that figure has increased to 57,000. Supply will meet demand on the basis of the law of averages and, hopefully, that will happen soon. It is easy to seek increases in grants and availability of houses under the shared ownership scheme. That might solve the problem for individuals but a different segment of house seekers is pushed out of the market. The scheme is continually reviewed. It was amended a few years ago but nothing was achieved because the threshold for eligibility meant a different segment of people qualified. Significant resources are available under local authority social and affordable housing schemes.

There is zilch. The Minister of State should live in the real world. This is crazy stuff.

The Minister of State, without interruption.

I had an interesting night in my constituency recently when 100 houses were allocated. However, a number of local authorities are not proactive.

That is the Minister of State's job. He should tell them.

We are doing a great deal. The Department's job is to introduce schemes and structures and it wants people on the ground to take action.

The Department should direct local authorities.

We are taking action and we have introduced three affordable housing schemes, two of which come under Part 5 of the Planning and Development Act 2000 and Sustaining Progress. Progress is being made under them.

If I live in County Kildare and public housing becomes available in Cork, I can make an application and it will be considered in the same light as one submitted by someone living in Cork. Does a similar provision apply to affordable housing? Wicklow County Council has adopted a local zoning policy. If a house is constructed in the county, people resident outside the county cannot purchase it. Does this policy apply to affordable housing? I am not trying to catch the Minister of State out and I will understand if he has not given consideration to this issue.

I cannot respond on the policy in Wicklow but, under the affordable housing scheme in Dublin, applicants are awarded additional points if they live or work in the area. I will come back to the Deputy regarding the affordable housing issue.

Should young people who want to build their own homes be exempt from planning levies? Until last December, the first-time buyer's grant went a little way towards compensating people for local authority planning levies. Should they be set aside in such circumstances? Are the conditions pertaining to affordable housing schemes uniform throughout the State or do they vary between local authorities?

Two affordable housing schemes are in place and a third, under Sustaining Progress, has not been introduced yet. They cater for different segments of the housing market and different rules and regulations apply in individual local authorities, never mind between local authorities. The first-time buyer is still doing well. The State still provides enormous assistance to him or her.

Through stamp duty exemptions and mortgage interest relief. People are trying to create the myth that first-time buyers are not buying houses but that is not the case. Approximately 50% of new houses are purchased by first-time buyers.

What about the other 50%?

They are bought by people from Kildare who move to Dublin, for example.

They are bought by investors.

Not necessarily. Some might be.

Acting Chairman:

The Minister of State, without interruption.

Private home ownership stands at 90%.

The Minister has done a good job to change that statistic.

However, 50% of new houses are bought by first-time buyers and that percentage is static. There is no point in trying to create a myth that first-time buyers are not in the market.

They are failing to purchase.

People bought houses before they needed them in recent years because they considered them to be affordable or because mortgage rates had reduced. If they waited until they needed to set up their own homes, it might have reduced the pressure on the market.

I am frightened by the Minister of State's smugness. He is in a world of his own and does not realise there is a crisis. How are first-time buyers being supported by the Government? Why are local authority housing waiting lists going through the roof? What percentage of new houses are purchased by investors? If he is so smug, he must have that information.

There is no smugness on my part. I am trying to bring a little balance to the discussion and outline a number of facts.

Was that balance or ballast?

We are all aware of the numbers on local authority housing waiting lists. Approximately 13,000 people will receive an offer of housing this year but others will join the list. I acknowledge people have joined the waiting lists in recent years who traditionally would have looked after themselves.

They are on the lists because they cannot afford to buy a home. The Minister of State is saying everything is all right.

We are trying to help them through the three affordable housing schemes. A number of people on local authority lists need social housing and will never be able to buy a house themselves. However, the affordable housing schemes will help the remainder to help themselves and they will be removed from the waiting lists. A number of local authorities in Dublin are more proactive in this regard than others and all public representatives should push for the development of land that has been sat on for years by local authorities.

Why does the Minister of State not direct them to do so?

Overall, €1.7 billion will be spent on housing this year. That is an enormous amount.

What percentage of new homes are purchased by investors?

I do not have that statistic to hand.

The Minister of State has said on a number of occasions that the main thrust of Government action on housing is to increase supply. Why then has the Government reduced the supply of social housing by cutting this year's budget? Apart from abolishing the first-time buyer's grant, increasing VAT on building materials, which, in turn, has increased the price of houses, and reducing the budget for social housing, what new policy initiative has the Minister of State taken to address the housing issue since he took office?

Hear, hear.

I often hear the Deputy asking for a new policy or new legislation. Sometimes it is possible to make good progress with what one has.

It is getting worse.

There is no progress.

There are more people on the housing list now than when the Minister of State started.

One must use what one has. The Government's main emphasis is on supply and, within it, affordable housing. An example of a new policy is the Sustaining Progress initiative which involves the provision of State lands. A detailed examination of the State's ability to provide more State lands is ongoing in order to kick-start the process. It is a new policy which will take a while.

How many houses has it produced so far?

We all know that it will not—

It has produced none.

We are all big boys. Anyone who thinks one can turn on a tap to produce new housing and get instant figures next month—

The Government has been in power for six and a half years.

We all know that it takes two or three years to get a dividend from measures taken on housing.

The Government has had six and a half years.

The Deputy asked me about Sustaining Progress which will provide good benefits. It is unrealistic to expect the benefits in a month or three months, however. The dividend of actions taken a few years ago will be received now and in the future. The Government is spending €1.7 billion this year on housing, including social and affordable housing. The figure does not refer just to local authority housing, about which we all have a hang-up.

To whom does the Minister of State refer?

Local authority building is one form of social housing.

The Minister of State might have a hang-up about local authority housing.

The voluntary sector is a growing segment of the housing market. About 13 houses were provided by the sector last year but that figure will increase to about 1,500 or 1,600 this year. It is becoming a significant part of the market. Social housing is not just provided by local authorities and nobody else.

The Minister of State – not the voluntary sector – is responsible for providing houses.

We are providing the money.

It is not good to blame the voluntary sector.

Acting Chairman:

Deputy Durkan, allow the Minister of State to conclude.

I am not blaming the voluntary sector.

That is what the Minister of State is trying to do.

I am giving it credit. I am trying to explain that social housing is provided by local authorities—

The Government is not providing enough money.

—and the voluntary sector with 100% grant assistance from the Government.

My party does not have a hang-up about local authority housing. It would like to see co-operative housing, voluntary housing, self-built housing, social housing and an increased provision of sites. These should be made available but it is not happening.

I would like to ask a specific question about Part V of the Planning and Development Act 2000 which was announced with much fanfare two and a half years ago but which was diminished somewhat at the end of last year. What percentage of housing completions last year were provided under Part V of the Planning and Development Act 2000?

This is the point I made a few years ago.

It was seven years ago.

I said a few moments ago—

It feels like years ago.

—that there is a slow dividend when one takes action in the housing market. The value of Part V is only now becoming evident.

The Bill was passed over three years ago.

That may be the case.

Three years ago.

That is what I am trying to explain, as the Deputy knows. He should stop acting stupid.

They built the Eiffel Tower in less time.

About 50 houses were produced in accordance with the Part V provisions in the first six months of this year. About 1,200 such houses are under construction. The first real dividend of Part V is coming through this year. Part V will be a major source of social housing in the future. Next year will be far better. The dividend of any new housing measure taken is not evident for a couple of years. This is the first year in which we are noticing the major effects of the Part V measures, although a couple of houses were built under Part V last year. Its effects will be quite significant next year and very significant into the future. It is a good measure. One has to give it time before one can see its value.

The relevant figure so far is 0.1%.

I have explained that I firmly believe it will be a very important part of social housing policy in the future. I have mentioned that about 50 such houses were finished in the first six months of this year and that about 1,200 such houses are under construction.

The relevant figure will then be 2%.

We cannot be sure if they will be finished in the current year.

Acting Chairman:

I have been advised that we do not have enough time to proceed to Questions Nos. 9, 17 and 64.

Saved by the bell.

Written answers follow Adjournment Debate.

Barr
Roinn