Mr. Brendan McDonagh:

I hope my opinion is the same as that of the chairman. One of the remarkable things is that one would have thought that in the depths of a recession in which over 100,000 people in the construction industry lost their jobs, like any business the prices would drop. However, the cost of building has effectively flat-lined all the way through from 2010 until today. People can use all manner of excuses not to build. The can say local authority levies are too high. They were high in certain places but, in fairness, the Government has done something to resolve that. They could say there was no clarity around Part V regulations. The Part V regulations have now been clarified. They could say there was no availability of construction finance. Far more players are providing construction finance now. They could complain about the cost of construction finance, but construction finance has become more available and is becoming easier and more affordable.

However, the main thing that might be holding back the issue is that house prices were rising rapidly. They recovered by 35% from the low point. Then, earlier this year the Central Bank introduced prudential rules, which effectively has had the effect of slowing down house price inflation. What we are seeing is that first-time buyers can secure up to approximately €320,000. This is based on the Central Bank rules of property priced up to €220,000 with a 10% deposit and in cases above that level there must be a 20% deposit. However, people cannot buy anything from €320,000 up to €450,000.

One then has a different market again above €450,000, in which people who are probably in negative equity are able to buy the bigger houses. However, this has resulted in something remarkable in the sense that some schemes in the commuter belt that were not viable 12 months ago are now becoming more viable again because people are beginning to commute again. They are buying houses in counties Wicklow, Meath, Louth and Kildare. This is because they believe they cannot buy a house in Dublin and consequently are buying houses in these areas. It is remarkable to me that people are sitting back and stating they will not build until sales prices rise. This means that they are not satisfied with a profit of €20,000 per house but wish to wait until it is €50,000, €75,000 or €100,000. That is the market; one cannot force people to build, but we have a severe housing shortage. NAMA commissioned some research by the Economic and Social Research Institute, ESRI, that considered population figures all the way out to 2030 which suggests an average figure of 20,000 units per annum will be required. Our debtors control approximately 30% of the landbank, while others control 70% of the landbank in Dublin and they are not building. As for those who state it is not profitable, NAMA is involved with our debtors and it is profitable. It is a question of how much profit people wish to make.