Tom Hayes (Tipperary South, Fine Gael)
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Question 59: To ask the Minister for the Environment, Heritage and Local Government if a special meeting of the social partners should be convened to discuss the housing problem, with a view to establishing proposals to bridge the affordability gap that excludes many first-time buyers from the housing market; and if he will make a statement on the matter. [11307/05]

Noel Ahern (Dublin North West, Fianna Fail)
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Housing and accommodation form one of the ten special initiatives under Sustaining Progress. Consequently, the Government already has an active engagement with the social partners on housing issues. The housing forum is the main mechanism for engaging with social partners on the initiative. Separate ongoing contact also takes place with the parties to the pay agreement in the context of developing the affordable housing initiative, which is one of the elements of the special initiative.

Issues of affordability derive from the unprecedented housing demand arising from sustained economic growth and demographic change experienced in recent years. Government policy focuses on achieving an appropriate supply response and using targeted measures to provide access to housing and accommodation for lower income groups. The success of policies to date is reflected in that 2004 was the tenth year of record overall house completions with almost 77,000. Work in progress under targeted affordable housing measures, including the AHI, indicate that approximately 12,000 units will be delivered in the next three years.

Recently NESC, which also includes the social partners, concluded its major study on housing issues. While we are carefully considering the issues raised, it is important to note that the report recognises that the general thrust of housing policy is correct. The housing forum is considering what changes are required to its work programme in the context of the issues raised by NESC for further examination. I am happy that through these arrangements we have effective engagement with the social partners, which allows for a meaningful input to the development of housing policy.

Tom Hayes (Tipperary South, Fine Gael)
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Would such a special meeting with nothing else on the agenda involving people with much to contribute in this area not focus people's minds and bring forward new ideas?

Noel Ahern (Dublin North West, Fianna Fail)
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I chair the housing forum involving the social partners. It has nothing on the agenda except housing. It is a special initiative and meets every quarter. No one simple solution to this issue exists without increased supply, which is why we have been working on that aspect for some years. Ten or 11 years ago only 22,000 to 23,000 houses were built annually. Last year the figure increased to 77,000. Most people would agree, therefore, that supply currently equals demand and we can expect stability in prices from now on.

Tom Hayes (Tipperary South, Fine Gael)
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While the number of new houses has increased, many young people cannot get on to the housing ladder. What message does the Minister of State have for the approximately 42,500 young people who have been frustrated in their efforts to buy a home?

Noel Ahern (Dublin North West, Fianna Fail)
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I accept that the rise in house prices in recent years has caused difficulty for some people in a certain income bracket. This is the reason the Government introduced a number of targeted measures to provide affordable houses for this group, an objective we are achieving. A couple of thousand affordable houses are built each year and we expect the figure to increase to approximately 12,000 over the next three years.

Other measures have also been taken. In the previous budget, for example, the Government removed the requirement for first-time buyers of second hand houses to pay stamp duty, an effective measure which benefited many of those to whom the Deputy referred by as much as €12,000.

First-time buyers are still buying a large number of houses. Figures for last year indicate that people who previously lived at home or in rented accommodation now buying their first homes took out approximately 40% of mortgages. This is a significant proportion of house buyers. The problem many first-time buyers currently face is obtaining an initial deposit rather than a mortgage. I am not trying to say price does not count — it does — but if one compares affordability, that is, the percentage of take home pay required to service a mortgage, one finds that people paid a greater proportion of their take home pay to service their mortgages ten or 15 years ago than they do now. The Government is conscious, however, that the position has worsened since the mid-1990s and is trying to help those in a certain income bracket who need help. The four schemes and the stamp duty reduction we introduced all help such people. As I stated, the main problem is often finding the initial deposit.

Tom Hayes (Tipperary South, Fine Gael)
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Finding a deposit is the core problem for those trying to get on the housing ladder. Does the Minister of State intend to bring firm proposals to Government to help such people whom Deputies encounter at every constituency clinic? It would be helpful to take meaningful action in this regard.

Noel Ahern (Dublin North West, Fianna Fail)
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Under the 1999 affordable housing scheme, buyers can obtain a local authority loan of up to 97% of the cost of a house. Until now, the State provided all loans for affordable housing but recently we concluded a deal with the Bank of Ireland under which it will offer up to 97% of the value of houses available as part of the four affordable schemes. I believe other financial institutions will follow the bank's lead and enter the market. While the political parties and others mention various schemes, I have no further announcement to make on the issue today.