Dáil Éireann Debate, Thursday - 14 October 2004
94 Mr. Durkan asked the Minister for Finance the extent to which house price inflation is affecting the competitiveness of the economy; the action he plans to address this issue; and if he will make a statement on the matter. [24892/04]
Amharc ar fhreagraHouse prices have risen significantly over the last number of years. Between 1995 and 2003, new house prices rose at an annual average rate of just under 14%, the equivalent rate of increase for second-hand house prices was 16%. The increase in prices over this period reflects the substantial increase in housing demand. This, in turn, reflects very strong wage growth, a large increase in employment, net inward migration and an increase in the population in the household formation age cohort. To the extent that prices were driven by these demand side factors, house price developments do not have a significant impact on the competitiveness of the economy.
It is also the case that housing supply has risen sharply in recent years. This year, many commentators are forecasting housing output of around 80,000 units, the largest ever number of completions in a single year. If this proves to be the case, then over 300,000 additional housing units will have been added over the last five years, which in per capita terms is unprecedented. The sharp increase in supply can reasonably be expected to result in a more moderate rate of house price inflation in future.
