Brian Cowen (Laois-Offaly, Fianna Fail)

As I have said on previous occasions, the increase in house prices since the mid-1990s is seen in the context of considerable structural changes and advances in the economy since then. Employment has risen by about 50% since the mid-1990s, while per capita wages have also risen significantly over that period. This has been supplemented by a reduction in the burden of income taxation. Demographic factors such as immigration and the increase in the cohort of 25 to 30 year olds have also been important in terms of the demand for housing.

The role of lower interest rates from our participation in the economic and monetary union, EMU, has also been important. For instance, real interest rates, that is, mortgage rates adjusted for the impact of inflation, have been close to zero since 2000, compared with typical rates of around 7% in the early 1990s. Financial market liberalisation, competition and innovation have also played a role by improving access to credit. These fundamental factors largely account for the increase in prices since the mid-1990s.

The Deputy will have to table a separate question if I am to give an accurate figure for the contribution made by building materials, for example, in the context of the overall tax take. If he tables a question to that effect, I shall see whether Revenue can provide him with the details. The fact is we all acknowledge that the current contribution of the construction industry is equivalent to twice the European average in terms of gross national product. That is a factor of the process of national development, the fact that our demographics are so different from the continental economies, for example, as well as greater domestic demand. The strong preference that people in this country maintain for the acquisition of private property as a means of pension provision for the future is another consideration.

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