Dr. Ronan Lyons:

One of the points raised by Deputy O'Dowd ties in with one of Deputy Coppinger's points about State-owned land and is clearly a live issue in this committee. I will not fight to the death over the issue of the local authorities versus approved housing bodies but the provision of social housing should not be left to the market. Most people are in agreement on that, given the failed experiment in other countries and, in particularly, what happened in Ireland in the last generation. The reason why approved housing bodies get a slight nod over local authorities is because in the past local authorities built and lent at scale and were also significantly more financially autonomous.

They could do these things. The approved housing bodies can now fill that role because the local authorities are so dependent on central government that I do not see them having the capacity. I would be more than happy to be won over by a local authority that can do this. While I know there are many small approved housing bodies, equally there are many small builders in the for-profit construction sector. The point is not about the small ones, but about the big ones. The top three, four or five approved housing bodies can work in partnership with developers and get significant scale, which was one of Deputy Ó Broin's points.

I have no quantitative forecasts on how much they could do overnight. It is just too much of an unknown. We do not know the parameters to be applied to that. The developer at the top of the Cherrywood development is Hines, an international Boston-based company. It is working with not only approved housing bodies, but also health care providers for older people and so on. It has all this housing stock and wants to ensure it is all used, so it is talking to those bodies. It is building thousands of homes. The only thing missing in that jigsaw, the only thing stopping Clúid looking for 1,500 of those homes and not 150 is the link between how Clúid pays Hines and how Clúid gets paid. Unfortunately, the present systems of differential rents, rent supplement and Part V do not make that link.

Deputy Coppinger asked what it meant that there was private interest in social housing. This is almost identical. I think the credit union is an example of this. The credit unions claim to have - I cannot remember the figure now - €3.5 billion and want to know why they cannot use it for social housing. They are not gifting it; they expect to get paid back. It is just other private sources of money saying, "If you need social housing, we're looking for 4% or 5% return, so go off and use it, and pay us back at 4% or 5%." That is all I meant by that. It is not that they would own it.

They are lending the money and not renting the buildings to the housing providers, which should be local authorities or approved housing bodies. I believe approved housing bodies can be more flexible because they can go from market to market and establish partnership relationships with developers to provide large-scale social housing that is, as Deputy Coppinger mentioned, not ghettoised. I would have a concern. Clearly not every local authority project that was built in the past is a ghetto. However, where I live backs onto O'Devaney Gardens, which is a classic example of what not to do. In terms of rebuilding it, the most obvious thing to do with such a site which is close to the park and close to the Luas is to have people of all incomes there. As in the example of New York that Deputy Durkan mentioned, people do not know who is who in mixed housing and segregation is much less likely. I do not think the solution is to raise the thresholds for the current systems.

In addition, I do not think it is financially viable to subsidise somebody on €15,000 a year - €600 a month. I cannot remember the exact figure; it might have been €500 a month. That would bankrupt the taxpayer. I am talking about an income and cost-based subsidy because that is the best direct link to meet people's needs. Every household has a need for housing and that need has a cost. Unless those two things are connected, it is not possible to ensure there is a meaningful right to housing for all households.

There is one important point that only comes up partly there. We need to think about building apartment blocks. This is true for social housing as well as in the privately owned and rented sector. It has almost never been financially viable to build apartment blocks in this country. The only time it was ever done was either in very high-income areas - there are some 1960s and 1970s apartments built in Dublin 4 and Dublin 6 - or when there were tax incentives. We have a real problem because the Housing Agency predicts that two thirds to three quarters of the housing demand will be for one and two-person households. We have enough family homes but just do not have families living in them. That is a big problem. This is not about forcing older people out of their homes either. People who want to stay in their homes can do so. However, there are many older people who would love to downsize.

There are no options for them either. There is a lack of options at all levels and ages.

Deputy Ó Broin asked specifically about the measures that have been put forward by the industry. I might at this point respond to a point made by Deputy Coppinger. I do work with daft.ie. I am here today not in any industry sense but because I care about the housing needs of people on all incomes, high and low. I do not know if agency is even aware that I am attending this meeting: it is not that type of relationship. I try to be independent and evidenced based. Among the measures being talked about by the industry is a reduction in VAT on land. I have looked at the figures. Even if VAT on land were abolished or land was made available free such that the only costs were in respect of construction and professional fees, it would still not be possible to build apartment blocks in Cork or in Limerick and rent them at current market rents in the hope of meeting one's costs. We have a huge problem around the core direct cost of building. I would probably listen more to the quantity surveyors than the Construction Industry Federation on that one.

Somebody needs to get into the nitty-gritty of how we build in Ireland in comparison with other cities and to find out what has gone wrong. The cost of building of a house did not decrease during the property bubble; it increased significantly. Roughly speaking, in 1995 the average house was worth €120,000 and, as best we can tell, it cost approximately €100,000 to build. The price of a house then increased from €120,000 to €360,000 and, it appears, the cost of construction doubled. When the price of a house halved from €360,000 to €180,000, cost being at €200,000 became a real issue. The reason lots of houses were being built during the boom is not because the price of a house was so high but because costs were low. Costs were quite high relative to incomes. It was because so much money was being thrown at us at that time that prices rose as high as they did. For this reason the focus on costs is crucial now.

Deputy Coppinger asked if reduced costs would lead to increased profits. I would not look to the boom to see how that works, rather I would look at who is building now. The main firms that are building now build on a percentage basis. They work out their costs, on top of which they include a margin and if the cost does not meet a particular threshold they will not build. If costs are lowered this lowers the euro profit they make on a building. It does not increase it. In regard to property currently being built, it is true that profits on such property will increase but almost nothing is being built in comparison with need. Society wins - I am not too fussed if the developer also wins - because more homes are built and overall house prices and rent levels decrease.

When we recall the property bubble, we think of lots of building, which we associate with rising prices but, as outlined in the chart on page 3 of my submission, prices during the bubble were pushed up by credit. Members will have seen the impact of all of the building in the following five years. When the credit stopped, additional building, particularly in areas outside of the main cities, decreased, which, in turn, lead to a decrease in the price of housing. The experience in every country has been that increased supply leads to lower rents.

Deputy Ó Broin mentioned the private rented sector. While I did not mention it specifically, I believe it has a key role to play. It appears that property ownership of approximately 70% is sustainable but that anything above that would be financially unstable. In regard to the remaining 30% and what portion of people rent because they are on low incomes or for lifestyle reasons there is no golden rule. The private rental sector is hugely important. I am not opposed to security of tenure. I am of the view that the current rent certainty measures are mild and that stronger measures could hurt the people they are aimed at helping because they would halt the building of new supply. Overall, I think the legal side is second fiddle to the market side. Nobody was worried about security of tenure in 2009 because rents were falling 10%, 15% or 20% year on year and if one was a tenant, one was king of the market. The real problem is lack of market power on the part of the tenant. If we increase supply, we give people more power. I agree with backing that up with security of tenure but as we professionalise our landlord base, that is happening anyway. Agencies want to maximise occupancy. Real estate agents such as Kennedy Wilson that are tasked with letting accommodation on behalf of landlords who do not have nieces or whomever coming to the city to attend UCD in the autumn are not interested in turfing people out of that accommodation. They want people in the accommodation they are seeking to let. So, we are pushing an open door with professional landlords.

I have what is probably a minor point on the extent of flipping and whether it and excessive trading drove up the value of properties. The evidence from other countries would say it did. Unfortunately - and this is where the academic in me comes out - we just do not have the data to be able to say that. I know Deputy Noel Rock and I asked him to put a parliamentary question on this last week. Could we get the Revenue Commissioners' records from 2000 to 2009? We have them from 2010 onwards but we do not have them from that period and cannot answer key questions around the bubble without that data. It is a small point but the issue is symptomatic. If we do not view publicly-owned data as something we can use to improve our future decision making - if we view it as an archive that we must protect from other people - we will end up making bad decisions.