Dr. Conor O'Toole:

I thank Dr. Roantree for the difficult questions. I will begin by making some general reflections on Deputy Boyd Barrett's comments. The research we conducted did not look at what share of annual output should be in particular groups. We asked, given the data, what share of households would be classified as having high housing costs and across the definitions, it is between 20% and 30% of households. That is not the same as saying that we need 20% or 30% of annual output to be at that level because it might need to be higher, if there are deficits or otherwise. Certainly in the long term, that is the magnitude of the share of households that one would need to be covering in these proportions to be dealing with the affordability issues.

On the issue of the "more supply" mantra, it is very clear from all of the research that there is excess demand for housing in Ireland. Housing supply has been less than what one would have expected on the basis of fundamental demographic household formation for many years. It is correct to say that if a lot of new supply comes in at prices that are unaffordable for households to purchase, then that will not alleviate the pressure on those households that are facing these challenges. It does matter where, across the housing price distribution, these new units come on line. That is certainly important. That is how I would sum up the findings of our research.

One of the findings of our research is that there is a requirement for a longer-term commitment to public housing to provide a large share of units more generally. That should not just be when times are good but should also happen when times are bad. In that way, one would be able to smooth the economic cycle through State provision of housing. When one looks at subsidies like HAP, which accounts for a very high share of social housing output in the current model, it is our assessment that delivery mechanisms for build, hold and acquisition are another long-term way to deliver those units. Redressing the balance in the long term towards those types of aspects is important, as well as trying to develop alternative rental models like cost rental. These can all be part of the solution in terms of moving the rental model towards one which provides affordable housing more broadly for households and which is sustainable in the long term. Our research showed clearly that low-income households in the mortgage market were the ones who saw a really big increase in the cost of their mortgages relative to their income during the crisis. These households took on very large mortgages that were unaffordable in the boom phase, with poor underwriting conditions and they were hit with very large income shocks during the crisis. One of the inferences from that is that we need a very strong macro-prudential framework to ensure that these households get the correct credit terms at origination. That is a critical component of the rules. As a consequence, these households, if they do not get a private mortgage need to be housed somewhere else and that is where the alternative rental models fit into the scheme, in terms of protecting these households from the fluctuations in the market which are not sustainable for their circumstances.