Noel Ahern (Dublin North West, Fianna Fail)

If houses are over-priced, why are prices rising? I suppose they are rising for different reasons, namely, because an extra 90,000 people were working in the economy last year and because we had 55,000 immigrants into Ireland last year, people who are at the age when they rent or buy houses. The house price rises were partly due to those factors, but also because of a policy started about this time last year by the financial institutions. They introduced gimmicks such as 100% mortgages, interest-only mortgages and intergenerational mortgages. The financial institutions which started that trend this time last year contributed greatly to the house price rises. The spiral of house price rises calmed down over a few years to rises of some 7% or 8%, but we now have a new spiral of rises of up to 15% or 17% for second-hand, established houses in suburban Dublin.

There is nothing we can do to produce extra houses such as those. One can build houses and apartments further out of the city, but the established houses, whether they are in Dún Laoghaire, Merrion, Glasnevin, Drumcondra or wherever, see great demand from people who possibly bought outside the city and are moving back in.

The spiral we are in is worrying. It is partly due to the booming economy and partly due to the fact that the financial institutions seem to have a great deal of money and are being too generous in handing it out. If the rainy day comes and interest rates are significantly increased, I hope that all the loans given out will have been stress-tested, which they are supposed to be. Otherwise concern could arise.

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