Dr. Kieran McQuinn:

On a brief aside, part of the difficulty we face very often in addressing these issues is trying to get decent information on whether it is agricultural land prices or other land prices, and understandably it is difficult for people to compile them.

The Deputy asked about the impact of increased availability of credit on land as an investment option. It is a very interesting point. It points to the issue of dangers of too much credit to start with. We have very much focused on the implications of credit availability on house prices and all the distress that was caused in the financial downturn.

There are a number of reasons for land being targeted as an investment. If people believe that house prices will continue to rise sharply, land will be an attractive proposition. There is evidence that over the past year that the macroprudential rules have managed to calm the pace of house price inflation, certainly in the Dublin area. The basic principle underpinning the macroprudential rules is that it should anchor house price movements to basically fundamental developments, income levels, etc., in the economy and that we will not have house prices spiralling way beyond income levels as they did before because people are just given even more credit. That is one aspect.

The other aspect is the importance of the site tax. Land is an attractive proposition if there is no cost to the holders. If they can simply sit on it year-on-year there is a major incentive to invest in it. Obviously, a site tax has been introduced with a higher rate applying. If that is effective, it can help to target land so that people will not perceive it as being an attractive investment opportunity as was previously the case. With the phenomenon of low interest rates globally, people are looking for yield. Certainly with the macroprudential limits, house price movements should be more anchored. We should not see the crazy returns and people should not expect the crazy returns that existed previously. If a site tax is to be effective, it should target the speculative return on land.