Bertie Ahern (Dublin Central, Fianna Fail)

The cross-departmental team on housing, infrastructure and public private partnership is not involved in discussions on the Shannon to Heathrow connection. A separate group of officials has met with a large number of the interest groups for the Shannon area, both in Dublin and in Shannon. It has engaged with State agencies in assessing the consequences of the loss of the route by analysing the figures of the past number of years. The group has also helped to co-ordinate efforts across a number of Departments to come up with whatever initiatives the State can take to alleviate the difficulties and to find alternatives. It is not the team to which the questions refer but it has been very active.

On the Deputy's question about housing, I have heard what the Construction Industry Federation, CIF, has said. I attended a function yesterday, in its new headquarters, relating to CIF pensions and I spoke to a number of people involved so I am aware of the views of some of them on this issue. Stamp duty is not a matter for the Civil Service but the Department of Finance. There has been ongoing contact with the Department and the Department does not share the CIF's view at all. The committee tries to co-ordinate efforts and takes a big interest in infrastructure. The key objective is to achieve the appropriate level of supply to meet demand, which has been the challenge for the past number of years. There has been unprecedented growth in the past ten years and the market continues to be underpinned, in terms of volume, by demographic trends. The high levels of housing output in recent years has to be viewed in the context of a relatively low ratio of housing stock for the population compared to other EU countries. The recent report by DKM Consultants, which is the most comprehensive report on construction industry indicators and was published at the end of August, indicates the likelihood of housing completions being approximately 77,000 this year, which would appear to be consistent with the views expressed by various commentators who have said the figure will be lower next year.

Price escalation is the greatest threat to the market and the committee has been trying over the years to ensure we keep supply and demand in equilibrium because that is how we keep the industry strong, and employment in the industry high. It is also how we will bring about a moderation in house prices, which is what we have been trying to do for some time.

The view expressed by the committee in the various discussions is that price escalation is the greatest threat, not only in terms of affordability but also because excessive prices increase the risk of a subsequent fallback. The Government has issued timely cautions in the past two years about the danger of the moderation in prices being reversed. Regrettably, our concerns proved well founded as the moderating price trend reversed dramatically, from single digit growth in early 2005 to as much as 25% in the third quarter of last year. Even though there were a number of interest rate increases in that period the value of approvals in the second quarter of last year was almost 60% higher than in the same quarter of 2004 and the availability of so much additional funding in a heated market was, in the view of the committee and its advisers, bound to exert some pressure. Against that background, the recent turnaround from unsustainable house price escalation, such as happened in 2005 and 2006, should be neither surprising nor unwelcome. We are now seeing transition to a more balanced and mature market and it is in everybody's interest that the housing market evolve on an orderly and sustainable growth path in terms of prices, lending and output. This positive overall view is reflected in the Central Bank's report of last week. Easing prices should bring more buyers into the market, helping to ensure its continued growth.

We have also taken a range of measures to help affordability, such as general reductions in taxation and the doubling of mortgage interest relief in the last budget. We have abolished stamp duty for first-time buyers and have introduced affordable housing schemes. There was a new record in house completions last year and, even though this year is experiencing an easing in output, the level is still likely to be high. Investment in the NDP will help to underpin construction on the wider front. The completion figure for the first seven months of 2007 is 44,000. If adjustment were made month by month for delayed ESB connections, on which the figures are worked out, the trend would still be high. There is no doubt that there will be a moderation next year. We just have to watch how it goes during the remainder of this year and into 2008.

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