I am pleased to have the opportunity to address Seanad Éireann on the important subject of housing. Housing is as important to the modern dynamic Ireland of the 21st century as it was to our newly established State early in the last century, which was a situation of urban slums and rural deprivation. It was a big focus of public policy. Good quality housing is fundamental to our economic progress and is an important element of our national infrastructure. For all of these reasons and many more we must provide housing in Ireland that is of a quality and value fully comparable with the best in the developed world.
In progressing Ireland's development since we took office in 1997, the Government has paid particular attention to housing. We have made remarkable progress and I want to give the House a brief outline of just some of our achievements. The supply of housing has been transformed since 1997. Last year almost 77,000 units were completed, which was double the level achieved in 1997. Our rate of house building, at 19 units per 1,000 of the population, is almost four times the western European average. Housing supply in the greater Dublin area, which averaged about 9,000 or 10,000 units per annum in the late 1990s, increased to almost 17,000 last year.
We have introduced adjustments to our tax regime to assist the first time buyer and we have introduced a range of targeted schemes to assist those seeking affordable housing. We have increased investment in social and affordable housing. I do not mention these things to boast, but because I believe they are important national achievements in which the nation should take some pride. We have concentrated on improving quality as well as quantity. Major funding has been devoted to regenerating run-down estates. For example, Ballymun is among the largest regeneration projects underway in Europe. It is a remarkable achievement by the people of Ireland, redressing a wrong that was created in Ballymun all those years ago. These achievements did not just happen. Government actions have supported the strong increase in overall housing supply and increased construction employment. Current policies have built on good foundations. Housing policy has been always a central plank of Fianna Fáil policy. In recent years, these policies have done the business.
Ireland has had rates of house building not seen anywhere else in Europe in recent years. Only in the immediate postwar years have such housing output levels been seen. To put the scale of activity into perspective, three out of every ten homes in Ireland have been built within the last ten years — nearly 500,000 units in all. Output in 2005 is likely to be broadly in line with 2004. Some of the Cassandra-like statements that it would fall away do not seem to be upheld by the available data. The exceptional rate of house building in Ireland has been facilitated by improvements made by this Government in the planning system and substantial investment in infrastructure in recent years. It has also been facilitated by councillors of all parties and none around the country who have the courage to zone sufficient land to build houses. Without those decisions, some of which are taken in the teeth of opposition, we could not build the homes of tomorrow. Increased output has brought greater stability to the housing market.
The general consensus among commentators is that current prospects for stability in the housing market, with balanced sustainable growth, are very good. A strong housing market has a positive effect on the economy as a whole, not just through its contribution to GDP. There are now around 240,000 people working in the construction industry compared with 92,000 in April 1994. If my memory serves me correct, 20 years ago the figure was as low as 71,000. The house-building industry has made a considerable contribution to this growth.
The residential construction component of total construction output grew from 51% in 1994 to 65% in 2004. The gross value of housing output was just over €18 billion last year, which is the equivalent to 14% of GNP. In 1994, housing output represented just 7% of GNP. These are not just blank statistics. Each of these houses represents a home. Each of these wage packets represents security and all that is positive for the people in the industry.
In analysing the housing boom, the National Economic and Social Council commented that given the remarkable strength of demand, a significant increase in house prices was inevitable. Supply is the key to responding to this unprecedented demand. The Government has placed a strong focus on policies to boost supply. It is not often acknowledged that house price increases have moderated since annual house price inflation peaked at a phenomenal 48% in 1998. That figure was caused by a serious imbalance between supply and demand. By comparison, house prices rose in 2004 by about 11% over 2003. It is still a very high figure, but at least it is heading in the right direction.
The Government has been particularly concerned to improve access to affordable housing and has promoted a range of schemes for low income households in recent years, such as the shared ownership scheme and the 1999 affordable housing scheme. More than 20,000 households have availed of these schemes since their inception. I expect that approximately 12,000 units in total will be delivered between 2005 and 2007.
The affordable homes partnership should be mentioned. It was established recently by the Government and will focus initially on the greater Dublin area. Although the partnership was only established last August, it has already made significant progress. It operates under the stewardship of Mr. Des Geraghty and a dynamic board. The partnership has already placed public advertisements inviting expressions of interest from parties capable of providing and developing land mainly for affordable housing. It is also giving early attention to the potential for land swaps.
One of the land swaps undertaken as a test earlier this year was the highly successful Harcourt Terrace pilot project. At the time, there was some extraordinarily unbalanced media comment about the concept of a land swap. However, that exercise has yielded 193 new homes ready for turnkey development. This is not a bad return for a land swap involving what was little more than a shed and less than a half acre of land. Undoubtedly, had we sold the land, taken the money and invested it in the normal way through the local authorities, we would not have seen 193 houses within a 12-month period. Everyone knows that is the case and that this was a good deal. We must now think outside the box as to how we might get better outcomes.
These homes and other affordable homes are now marketed in a most innovative manner by South Dublin County Council. I compliment the council on the manner in which it has dealt with this issue and its property path office is something that should be copied by all local authorities. I ask Members who have particular influence or contacts with county councils to encourage them to investigate this.
I want to discuss Part V. The NESC has suggested that Part V was "the single most important policy development in recent decades." This innovative piece of legislation will make a substantial contribution to the delivery of social and affordable housing output over the coming years. Part V requirements do not apply to all residential developments and the number of units delivered through Part V arrangements is dependent on the level and commencement of private sector residential development and, crucially, on the nature of the arrangements entered into. While it will take a number of years for Part V to fulfil its potential, its impact has begun to be felt. Already, by the end of June 2005, almost 1,300 housing units were acquired under Part V arrangements, more than 2,200 affordable units were in progress and a further 2,500 units were earmarked for acquisition. The transfer of 17 parcels of land and 169 partially or fully serviced sites has also been effected and more than €18 million has been received in payments in lieu under the withering levy. However, as Minister, I discourage local authorities from taking funding and prefer if they take the houses and move people into them.
The Government remains committed to the delivery of strong social and affordable housing programmes, as evidenced by the record levels of funding it has committed to these measures. The total housing provision, Exchequer and non-Exchequer, in 2005 will be more than €2 billion. That sum is more than double the expenditure in 2000 and more than five times that of 1995. Such a rate of acceleration is astonishing, even given house price inflation. More than 13,000 households throughout Ireland will be assisted through various social and affordable housing measures in 2005. This compares with approximately 8,400 households in 1998.
To further expand our response to housing needs, we have introduced the rental accommodation scheme. This is an additional housing option for households that are currently accommodated within the private rented sector. This option will make some strong inroads in the coming years.
We also encourage and support local authorities in implementing programmes of works to improve the quality of existing local authority housing. All Members will share my view that this is extremely important. The central heating investment programme was introduced last year to deal with those local authority houses that do not have adequate heating systems. This programme is making a real difference to the quality of life for many people. We have put aside €30 million this year for the programme and I am anxious that local authorities will press ahead with the work. I am also anxious that they receive value for money because in one or two cases that have been brought to my attention, I was not happy with the standard of work. I have made this clear through comments in the media and will continue to so do because carrying out sub-standard work is a betrayal of those who need central heating, particularly as the State and the taxpayers have put funding in place.
I am strongly committed to ensuring that resources set aside by the Government will help the maximum number of households. Local authorities have a key role in the delivery of this objective. Housing is, rightly, a local issue and local authorities must respond to the nature and extent of local need by devising and implementing appropriate programmes within the resources made available by the Government. Some authorities are more successful than others and I will examine ways and means to encourage those who are somewhat behind to improve their performance.
To create a strong framework for delivery, we have required local authorities to put in place five-year action plans. We have also introduced capital envelopes for funding purposes. Hence, the old discontinuities within the system have been removed. Past excuses for failing to meet housing targets no longer apply. In that context, when one considers the figures on output, it is disappointing that some local authorities — usually the same poor performers — are underperforming. I again ask Members who have any influence with local authorities to encourage them to improve their performance.
In conclusion, improving services requires both investment and ongoing reforms to ensure that resources are applied in a way that is efficient, effective and equitable. Some challenges for the future and issues requiring consideration have been raised by the NESC. Further responses to the NESC are under development and I propose to issue a new statement on housing policy soon that will set further directions for the medium term. In the meantime, we have made important advances in respect of the new initiatives announced in June, including the establishment of the affordable homes partnership.
My focus as Minister will be to build on the achievements to date, to promote housing supply at levels required to meet demand, to supply record levels of affordable housing, to modernise and develop the private rented sector, to roll out a strong programme of investment in social housing and to improve service and performance. The Government has a strong record on housing and will not simply rest on its laurels. It will press ahead with existing and new programmes to provide the best housing responses to Ireland's dynamic economy and society. That is the challenge for my Department, its agencies and me in the period ahead. Most importantly, it is a challenge for all at local and central government level to put their backs to the wheel to make an extra effort to deliver good quality and more affordable housing and to create the kind of homes that a dynamic and wealth economy should. The Government is making available the resources to ensure that the sector, particularly the social sector, continues to develop. It is important that local authorities also play their part.
