Dr. Kieran McQuinn:

The general point is very valid. Going by some of the international literature, the more freely available the land is, the better for a housing market, the less the volatility and the fewer the swings in prices and housing supply. Irrespective of whether the land is held by the State or privately held, the bottom line is that once land is more freely available, housing markets tend to operate more effectively and efficiently. In Ireland, the Land Development Agency is very positive in that it can help to free up State-held land. Equally, it is a question of considering measures such as the vacant site levy as a way of targeting land held on the private side. The key issue is getting land, irrespective of whether it is held up by the State or privately.

On the profit margin issue, the point made was very valid.

As we mentioned in our opening statement, it has struck us that from a simple supply-and-demand perspective, people on the construction side may say the margins are not currently available to bring about greater levels of supply. They might want 30,000 or 35,000 units, for example, but may get only 20,000. Although they say profit margins are an issue, house price levels in Ireland are very high by international standards. One cannot expect price levels to continue to rise, which brings us back to the kernel of the issue. If there is not adequate supply, given the high price levels, it means the issue is on the supply side of the market rather than the demand or price side, which is a crucial point.

As for what the cost side is, we have identified land costs as one issue while others have mentioned productivity in the sector. The construction sector is, relatively speaking, a sheltered part of the economy and is not as susceptible to competition in the way other sectors are. There may be issues, therefore, with productivity in the sector. People in the construction sector tell us it is inevitable that some of the changes on the banking and financing side would make life a little more difficult for the smaller-scale producers. Given the changes in the finance and the higher levels of equity now required by developers, there tends to be a bias in favour of the larger-scale developers and operations. That is a by-product of the fallout from the financial crisis. There are certain factors we can consider but that is just the way the market is.

I take Dr. O'Connell's point about the difference between a site value tax and the vacant site levy. It is hard to work out how successful the levy has been, although there is certainly some evidence some sites have come on stream, as has some development. Equally, however, it seems there are certain administrative issues with its implementation, some of which have been documented in the media. One presumes that the sooner they are tightened up and the more efficient the levy is, the more it will help to bring private sector land into the market and affect the speculative component of land prices, which keeps them elevated and is one of the main reasons the cost of building a house is so high relative to other markets.