Michael Noonan (Limerick City, Fine Gael)
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Construction was obviously a sector of the economy that was so damaged one would not know what to do with it when one approached it initially. However, it is being repaired. The first issue for the construction industry is that unless the cost of building a house is less than the price for which the builder can sell it, no house will be built. That is the first thing to remember. House prices in Dublin and commercial property prices had dropped well below their replacement value. They are only coming back up now in the last six months. I realise that there are parts of south Dublin where this does not apply, but in general around Dublin for the builder to build and sell his first house 12 months hence, he would probably be fairly satisfied to take his cost out and perhaps get 6% or 7% on it. It has only barely turned.

On the commercial side, one would have to get approximately €35 per foot for commercial or office blocks in Dublin to break even, so rents would have to go beyond that. They are €38 to €40 per foot now. That is the reason one is seeing sites opening up and cranes again on the horizon.

It is not rocket science. It is very simple. Until the price goes above the cost of producing the extra unit, nothing happens in a market. It must move into that position. I believe we are getting there fast. I introduced the real estate investment trust, REIT, legislation and the third one was announced today. It is a Canadian group and it wants 10,000 residential units in Dublin. It is in the market to buy apartment blocks and refurbish them. It is also in the market to build. The National Asset Management Agency, NAMA, has its portfolio of builders ready to go and it advertised for joint ventures recently. It got an enormous amount of offers from abroad, with foreign money that is prepared to finance builders in Dublin to build houses.

It is at the repair stage, but it is only barely turning. In rural areas there were almost 8,000 houses built last year but almost all of them were one-off houses. If one is getting married, getting a site from one's father and intending to live there for a generation, whether the value of the house goes up or down is not as important as if one were buying in an estate. The estates of houses are not yet there. The one-off houses are. We need get back to having reputable builders building estates of three-bedroom family homes, starting in Dublin, then moving to Cork and Galway and then on to the big towns around the country. There is a supply shortage and many young families have been living in restricted apartments. They want to break out and they need the supply. We must drive that hard and I expect the Government to bring forward a significant policy on that in the coming weeks.