Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As outlined in the Medium-Term Economic Strategy 2014-2020, the Government continues to work on addressing challenges in the property and construction sectors. This includes the development of an overall strategic approach to housing supply, identifying and implementing further improvements in the planning process to facilitate appropriate development, and seeking to improve financing options for development and mortgage provision.

In terms of residential property prices, when assessing the recent pick-up in house prices it is important to remember that residential property prices fell by just over 50% from peak to trough and residential property prices nationally are still 47% lower than at their highest level in September 2007. While much of the attention of late has focused on the Dublin market, prices in the capital are currently close to 50% lower than at their peak in early 2007. It is against this background that the recent appreciation in house prices must be assessed.

It should also be noted that the previous housing bubble was accompanied by a dramatic increase in mortgage lending. The same cannot be said of the recent increase in house prices, in that the indications are that a large percentage of transactions are taking the form of cash purchases. Figures from the Irish Banking Federation show the value of mortgage lending for house purchase in 2013 stood at just €2.4 billion, or just 8% of the value of mortgage lending in 2006.

In terms of residential rents, according to the consumer price index, private rents rose nationally by 6% in 2013, following from an increase of 2.5% in 2012. However, this follows a fall of over 25% between 2008 and late 2010. On that basis, private rents are now at approximately the same level as in January 2003.

In terms of output, while the demand for housing is a function of a number of economic and demographic factors, current levels of housing output are running below estimates of medium to long-term requirements, as projected by the ESRI and others, based on underlying demographics and other factors. As I outlined in my budget 2014 speech, I am conscious of the supply limitations in certain urban areas. In light of this, I introduced several measures in that budget to help increase the supply of suitable residential housing stock. These included, subject to state aid approval, the extension of the living city initiative to include Cork, Galway, Kilkenny and Dublin and the broadening of eligibility criteria to include all buildings built prior to 1915.

NAMA has adopted a phased and orderly approach to the disposal of loans and assets in Ireland. This means that the release of assets for sale in the Irish market is being done in a manner that takes account of the market's capacity to absorb them. NAMA's approach since its inception has been vindicated by the significant improvement in the Irish property market over the past 12 months. This has enabled NAMA to sell substantial asset and loan portfolios at very competitive prices and, in so doing, NAMA is reducing the contingent liability that its senior bonds represent for the Irish taxpayer.

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