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House Prices

Dáil Éireann Debate, Thursday - 3 July 2014

Thursday, 3 July 2014

Ceisteanna (25)

Richard Boyd Barrett


25. Deputy Richard Boyd Barrett asked the Minister for Finance his views that the continuing dramatic increases in property prices and rents are unsustainable and represent a threat of a property bubble; his further views that Government intervention to prevent such a bubble is urgently needed; and if he will make a statement on the matter. [28539/14]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am aware of recent price dynamics in the residential property and rental markets. These have come after a fall in national residential property prices of over 50% from 2007 to 2013, as indicated by the CSO's Residential Property Price Index and a peak to trough fall of over 20% in the national rent index compiled by the Private Residential Tenancies Board.

The Government recognises that the driving force behind recent price and rent developments is a shortage of supply. With economic recovery, there is an increased level of housing demand, particularly as a result of the growth in the number of people at work. To date, supply has not responded commensurately to demand and, as a result, prices and rents have increased.

These issues are being addressed under the Construction 2020 Strategy: A Strategy for A Renewed Construction Sector. The Deputy should be aware that my Department is party to a range of actions as part of the Strategy which addresses among other issues: housing supply, with a particular focus on planning issues and appropriate and sustainable development financing; transparent and sustainable mortgage lending; the application of the tax code to the construction and property sectors; as well as addressing legacy issues associated with the property bubble. All of these actions are detailed in the Construction 2020 Strategy publication.

In Budget 2014 I introduced a number of measures to help increase the supply of suitable residential housing stock in light of supply limitations in certain urban areas. These are outlined in my Budget 2014 speech but for instance included subject to State Aid approval the extension of the Living City Initiative to include Cork, Galway, Kilkenny and Dublin and the broadening of eligibility criteria to include all buildings built prior to 1915. Furthermore, NAMA has said that it expects to fund the delivery of 4,500 houses and apartments to serve the Greater Dublin Area by end-2016.

In summary, I wish to assure the Deputy that my Department continues to monitor developments in both the purchase and rental property markets. As set out in the Government's Medium Term Economic Strategy and the Construction 2020 Strategy, the Government will continue to work on addressing remaining challenges in the property and construction sectors.