Dr. Conor O'Toole:

I want to pick up on the affordability and the credit liberalisation issue. As the committee will be aware, we have done considerable work on affordability in recent years. While we have a housing supply bottleneck, that supply bottleneck will not be dealt with by lots more units; it will be dealt with by units coming in at the right price that are affordable where those bottlenecks are. The research is very clear on that; it is in lower to middle-income households. When we look back on whether this initiative has been successful, a critical indicator will be the extent to which it has delivered units in that particular area. The extent to which it can be leveraged to ensure affordable prices on the rental side and the purchase side is a critical indicator.

As Dr. McQuinn has mentioned, house price volatility has been a characteristic of the international environment. With the very low interest rates, global speculative investment has looked for yield, and land not just in Ireland but in the UK and more globally has been a very attractive investment asset for many investors. As Dr. McQuinn said, people holding that investment is not necessarily the issue; it is that they can sit on it and they do not have to use it with yield accrued over time. The implication from a societal perspective is that units are not developed on that land.

While the LDA will not be able to deal with this on its own, it needs to come as part of a package of measures, including a site tax and other instruments that can be used to ensure that. The speculative element in land is taken out. Professor Paul Cheshire of the London School of Economics carried out research showing that the UK has the same issues as we do in this area. The key is unlocking supply at affordable rates.