Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)

A constituency colleague has already addressed the factual situation regarding social and affordable housing, at least partly with relevance to Cavan-Monaghan, so I will focus on the ever-spiralling cost of houses, now out of reach of so many young couples, even dual income partners. I viewed the opening speech of Minister for the Environment, Heritage and Local Government, Deputy Roche, as self-congratulatory. It completely ignored the spiralling price of homes. According to the National Economic and Social Council housing report, up to a third of all new households, almost 14,000 annually, formed in the period 2001 to 2006 would fall below the affordability threshold. That was as high as 42% in some urban areas.

When we consider average house prices for the quarter ending in June 2005, we see that for new homes, there was an annual increase of 11.8% throughout the State. The average price is now €275,394. In Dublin, there was an increase of 7.4%, bringing the average price to provide a home to €346,683. For second-hand houses, the State-wide figure of €332,151 represented a 10.1% increase. In Dublin, the average price was €440,520, a 10.3% increase. These are substantial increases and they have been downplayed by the Government to the extent that the media have not given the matter the attention that it deserves. It affects all families and everyone throughout the country, irrespective of their politics.

The cost to the State of property tax incentives, such as section 23 and section 50 tax relief, is unknown to the Department of Finance, something that I have questioned on numerous occasions at the Committee on Finance and the Public Service. However, the information has not been forthcoming. Their impact in terms of increasing house prices is not being taken into account. They pit investors against first-time buyers. Let us make no mistake. It is the latter group that is losing out. There is, therefore, a strong case for the abolition of those reliefs.

The standard conservative solution and the approach adopted by the Government to the house price crisis is to rely on the supposition that with the current high level of output, balance between supply and demand can be achieved in the course of this decade so that house prices stabilise and, consequently, affordability issues are resolved. However, that view is strongly contradicted by the NESC report which states that "the number of people eager to purchase a home but unable to do so under market conditions is unlikely to get smaller". For example, any improvement in affordability due to further reductions in the rate of increase in house prices and the catch-up in earnings relative to them is likely to be more than offset by interest rate rises.

The Minister for the Environment, Heritage and Local Government, Deputy Roche, spoke of resting on his laurels, but he has none to rest on in this regard. The Government has done nothing to address house prices since entering office, and that is what is causing universal hardship for young couples today. It must be tackled, and I urge the Minister to do so.

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