Enda Kenny (Mayo, Fine Gael)

This is a serious matter affecting everybody in the general economy, as everybody understands. I recall the announcement made by the former leader of a party on this side of the House which led to a complete brake on the movement of houses in the market. As the Deputy is aware, it is not generally the policy of the Government to interfere in the housing market. Let it find its own level. I am aware of the announcement by the Central Bank.

On the banking sector, the general flatness of the indigenous economy and movement in the construction sector generally and the housing market in particular, the Government has reduced stamp duty on all commercial property transfers from 6% to 2%, removed capital gains tax on property held for seven years, raised mortgage interest relief from 15% to 25% for first-time buyers in 2012 which could yield savings of €5,000 per couple and has allowed mortgage interest relief for the next seven years, if residential property is bought in 2012. From speaking to auctioneers, these moves have resulted in some movement but obviously not as strong as one would like.

The indications are that Irish commercial property yields are at historically high levels owing to the fall of 65% in prices. There has been significant foreign interest because of this. I read in one of the newspapers a few weeks ago that there had been movement on €70 million worth of office space in one weekend. The CSO statistics show that the asking price for property remained unchanged in March compared to the position in February. There was a slight increase in parts of this city and the greater Dublin area. There have been reports from estate agents of increased viewing figures for properties, as people decide whether they should trade up or down.

The Economic Management Council held a number of meetings with Bank of Ireland, AIB and Ulster Bank and mortgage lending was one of the key issues which arose. Clearly, the case was made that some people had great difficulty in accessing mortgage credit owing to changed circumstances. Younger people might be employed on contract only and some banks find it difficult to deal with this when approving mortgages. Bank of Ireland set aside €1.5 billion for a mortgage lending fund and reports that it is seeing increased interest among buyers. What we want to know is the scale of mortgages not just approved but also drawn down. AIB has set up a similar fund worth €1 billion and indicated that it could increase if demand increases. Ulster Bank has a dedicated fund and indicated it is willing to increase it if demand increases. As the Minister for Finance pointed out, it would be preferable if the construction industry was playing a proportionately stronger part in the general economy. From speaking to auctioneers directly, there is evidence of increased interest and a slight indication of increased house prices in some parts of Dublin, although they are not anywhere we would like them to be.

The Government will continue to interact regularly with the banks on the programme they have set out and in dealing with issues that arise for people who either cannot obtain mortgage approval or receive it with conditions attached that are too difficult for them to meet. The banks' own programmes are worth €1.5 billion and €1 billion, respectively, while Ulster Bank has stated it will increase its fund if demand increases.

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