Professor P.J. Drudy:

Landlords can escalate the rent after two years, so that does not make any sense.

There were a number of other aspects to the changes introduced that were useful, but the issue of rent regulation was the fundamental problem. It should be rent regulation that will continue. One might get rid of it five years hence, but certainly, at present, rent regulation of the type I am discussing is essential, with rents being tied to inflation, a small percentage or in accordance with improvements to the properties.

The Deputy raised the constitutional problem. I tried to deal with that and I hope I answered it. I do not believe or accept that there is a constitutional problem. The Constitution is good as it stands. Éamon de Valera, whatever his faults, got that fairly right. It is not as strong as I would like, but it is not bad.

On the question of why house prices have risen so much, there is a range of issues. One thing that would drive the Deputy's constituents probably completely mad would be to decide to impose a capital gains tax on the principal residence, so I will not suggest it. It would go down very badly with people, but it is a possibility. It would really dampen down prices. The property tax should have dampened down prices but does not appear to have done so. It is scary to look at the national newspapers each day. There appears to be little available under €1 million. I find it very depressing. I have a son who is paying a very high rent in the private rental sector in Dublin. He has avoided buying because he says he cannot afford to buy. I have a daughter who is renting in the private rental sector in London - imagine what is happening in London - so I am very familiar with the issue.

Why have house prices risen so much? I refer to the boom and the diagram I provided to the committee. I call part of the diagram super normal profits. I would call the difference between the consumer price index and the top line in that diagram very considerable profits. The cost of land is also a critical issue in why house prices have risen so much. Government policy also has something to do with it. As I said earlier, government policy undoubtedly imposes levies, VAT and so forth, so there is quite a big take by the Government. It is difficult for a Government to pull back from that because it needs the money to run the country. I do not dispute that. Certainly, one needs to look at land and super normal profits. Are developers asking too much? That is the question. I have heard figures such as €39,000 or €40,000 bandied about as the profit needed on a home costing €300,000. Is that reasonable? It might be. However, the figure of €300,000 is far too expensive for a home for most normal people.

The trick must be to bring down house prices. Obviously supply is one of the key issues. I accept what many people say, that it is "supply, supply, supply", but there is more to it than supply. There is also the Central Bank aspect to dampen down demand and stop people making crazy decisions to buy houses they cannot possibly afford. However, supply is important, so we must absolutely escalate the supply of both private and social housing. We only produced 12,000 private houses last year. That is a very small number. As the Deputy said, 80,000 or 90,000 were produced in 2006. We were capable of doing it in 2006, so why not now? If the private sector does not do it, the State should do it. That is my view.

On the social housing strategy, unfortunately the houses are not being built. I do not know what is going on but it is pathetic. The social housing strategy was produced in 2014. Apparently, the former Minister, Deputy Alan Kelly, had all sorts of problems getting the local authorities to build. I do not know what happened. They said they had the money. Only the Deputies can answer that.