Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

3. To ask the Minister for Finance his views on whether the deepening housing shortage, rapidly rising rents and property prices and the National Assets Management Agencies plans for large-scale sell-offs of its property portfolio to multinational asset managers and property investors represent a macroeconomic danger and may have serious implications for the public finances; and if he will make a statement on the matter. [16333/14]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

For some time, I have been trying to ring the alarm bells about the dangerous and flawed approach of the Minister and the Government to the housing and property sector. In dealing with other Ministers, I pointed out that it is leading to an emergency in the area of homelessness and the social crisis, but I also believe that it represents a serious threat to the macroeconomic health of the economy. This is confirmed by Douglas Newman Good's survey last week which shows that, unbelievably, a property bubble is developing again, just as I told the Minister it would approximately six months ago.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | 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.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

The Minister shows an unwillingness to acknowledge the seriousness of the issue. It is not just about absolute levels of property prices or rents; it is about the dramatic increase in property prices over the past few months. Property prices in Dublin have risen by 23% in the past 12 months, by 12.9% in the past three months and since 2012, when the market bottomed out, prices have increased by 36%. I do not have figures for rent but the homelessness crisis, where six people declare themselves homeless every day, is indicative of the dramatic rise in rent taking place in Dublin. Two years ago, the Government told us this would not happen and said that cuts in rental allowance could lead to a reduction in rent. The Government has been spectacularly wrong in its approach to this sector and, unbelievably, it has introduced property-based tax incentives such as real estate investment trusts, REITS, and changes in capital gains tax that encourage a massive speculative surge from big vulture funds that have accelerated their investment in this area. It is causing a dangerous property bubble.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy gets confused with percentages. If a house drops from €300,000 to €200,000, it is a reduction of 33.3% but if the house increases from €200,000 to €300,000 it is an increase of 50%. Moving away from percentages and looking at the actual amount of money by which house prices are rising in Dublin, the prices are still 47% to 50% below where they were at the peak of the boom.

It is very good news for people who have invested a lot of their savings in houses, particularly those in negative equity, that the housing market is re-establishing itself, of which I am in favour.

Of course, there is pressure on rents, but part of it is due to the fact that the economy has entered a growth phase and more jobs are being created than even the Government had anticipated. Many young people are being sucked into Dublin and looking for rental accommodation. The vulture capitalists the Deputy deplores so much are the ones who are helping to solve the problem. They will buy whole blocks of apartments and invest to upgrade them. They are investing in the economy and providing the accommodation we need. NAMA is playing its part also. The collapse was so profound that it will take a while to get the housing market back on an even keel again.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Deputy Richard Boyd Barrett overran his time allocation, but I will allow some leeway.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

The Irish Timestoday ran a headline which asked whether it was time to take a punt on Irish property again. Does this not concern the Minister or for that matter the Taoiseach in going to New York and talking about how property investors should come to Dublin because they could make a killing in the Dublin property market? To start to treat and incentivise speculation in property after the economy was beggared precisely because of that activity seems crazy beyond belief. One of the consequences of this, as I am sick of pointing out, is an absolutely massive housing and homelessness crisis. Even the Irish mortgage brokers association has stated it cannot and will not provide social housing for people on low and middle incomes. It will not do it. That is why we say rent allowance is not accepted. On the one hand, we again have speculation in this area and, on the other, we have a homelessness and housing crisis. When will the Minister wake up?

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Outrage does not build houses. One needs to have a plan-----

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

The Minister is not building any.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy should allow the Minister to respond.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

One needs to have a plan to build houses.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

It is the banks that are building them.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I remind the Deputy that it is only one year ago since he was equally outraged by the overhang of empty property in the market in Ireland - ghost estates and unfinished apartment blocks.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

Which the Minister would not give to the councils.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The recovery has been very strong. We have offered over 4,000 houses through NAMA to local authorities and they are available for them as they want them. NAMA has committed to building 4,000 social houses in Dublin in co-operation with the local authorities.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

The plan now involves building only 2,000 houses.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy should not interrupt.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

NAMA advertised for joint ventures and received the results in the past two weeks. There is huge interest in providing housing in Dublin through joint ventures between NAMA and experienced building companies with the use of foreign finance. NAMA has told me it is very confident that in the next five years or so it can produce 22,500 private houses - family homes - in Dublin. We are getting there, but in a broken market it is difficult to come forward with solutions.