Thursday, 6 April 2017
Ceisteanna - Questions - Priority Questions
Social and Affordable Housing
5. To ask the Minister for Housing, Planning, Community and Local Government if he will consider reintroducing an affordable housing scheme to assist those on low and middle incomes, in view of the severe lack of affordable and starter homes, the latest house price index figures and the impact of the help-to-buy scheme; and if he will make a statement on the matter. [17286/17]
The housing reports from daft.ieand myhome.iethis week show that house prices continue to spiral out of control. The latest REA house price index indicates the average three-bed semi-detached house in Dublin city now costs more than €400,000. To afford that, a first-time buyer would need a deposit of €40,000 and an income of more than €103,000. In order to buy an average house in Dublin, one needs three times the average wage. That is crazy. Why is there no affordable housing scheme? Why has the Minister not introduced a scheme to date and will he do so now?
For the record, house prices are back to where they were in 2002. I accept that prices are increasing at a rate that is not sustainable over a prolonged period but the core response to that must be to dramatically increase supply, in particular where people are looking to buy or rent homes.
A chronic undersupply of housing, over a number of years and across all tenures, is at the heart of the problems in the housing sector. Housing output fell by more than 90% from peak construction levels of more than 93,000 homes in 2006, which was a crazy number, to just over 8,300 new units in 2013. Rebuilding Ireland targets the accelerated and increased supply of housing with the aim of reaching an annual supply of at least 25,000 well planned, high-quality, socially integrated and affordable homes per year.
While I am aware of recent reports on house prices, average prices are still well below the peak levels recorded in 2007, according to the CSO's residential property price index. The key now is to achieve the continued increase in supply of new homes at affordable prices. While I have no plans at this stage to introduce a new affordable housing scheme, although we are working on affordable rental schemes, the range of measures being put in place under Rebuilding Ireland is designed to increase supply significantly and deliver housing at more affordable price points. For example, last week's announcement of a significant funding package of €226 million for enabling infrastructure under the local infrastructure housing activation fund, LIHAF, will help to support the provision of more affordable housing in the areas concerned, which have the potential to yield 23,000 new homes by 2021. A further important measure involves the greater use of State lands for mixed tenure housing delivery and considerable work is under way, in particular with the Dublin local authorities, to bring forward well-considered development proposals on a range of sites. The help-to-buy scheme is a limited intervention targeted at new builds only and is designed to encourage additional supply by the construction sector.
The scheme falls within the remit of my colleague at the Department of Finance. I do not disagree with the Deputy. There are significant pressures on many people looking to buy homes at present.
It is little consolation to people who find themselves unable to buy a house to tell them we have not quite reached bubble levels yet. There are two issues with regard to housing. Obviously supply is one, but affordability, which is a very closely related issue, needs special attention in its own right. In recent days, Philip Lane told the finance committee that house prices are increasing to an extent that only people on high incomes can afford them. In this regard, the actions taken in the budget in respect of the help-to-buy scheme have exacerbated the situation for many people. Does the Minister accept this is fuelling house prices? Will he consider suspending the scheme in light of the negative impact it has had?
"No" is the straight answer to that. It is important to put the help-to-buy scheme in context. In the last quarter of last year 3,005 purchases were made by first-time buyers. Of these, only 297, fewer than 10%, were new homes. Given the fact that first-time buyers make up only approximately 25% of the market this means we are speaking about 2.5% of purchases. I do not accept the idea this is driving up house prices.
The whole point of the help-to-buy scheme is this time last year builders were simply not building homes for first-time buyers because they knew first-time buyers did not have the capacity to put together a deposit, which is something to which the Deputy referred at the start of her contribution. Houses were expensive and the obligations on first-time buyers to put together deposits made it impossible for most of them to aspire to buy a home. The Central Bank and the Government came to the same conclusion because of the same evidence, that actually we needed to help first-time buyers to get a deposit together while at the same time limiting the amount of money a first-time buyer could borrow, linked to income. The net effect of the help-to-buy scheme has been to change the dynamics in the market and we are now seeing a lot more starter homes being built. Unfortunately, this takes time to impact positively on the market in terms of increased supply, but if we look at commencements, planning permissions and activity in the sector we are seeing significant increases.
The lack of availability of affordable building land is a factor in this, as is the potential for land hoarding. Last week, we saw Dublin City Council's first vacant site register, with 25 potential sites for house building. Half of these were publicly owned sites. The obvious thing in a housing crisis is to make publicly owned land available at a low cost or no cost to provide affordable housing. Why does the Minister refuse to take this action? There are plenty of sites in public ownership, which the Minister could make available under an affordable housing scheme, where small builders or bigger builders could come along and build three-bed houses for the suggested cost of €160,000, which would then be made available to people on low and average incomes. Housing is completely unaffordable for anybody on any type of average income. Why does the Minister not introduce a new affordable housing scheme? He has the land to do it. Will he tell us why he refuses to act?
-----to build at much increased volume. The big problem we have is there has not been house building activity to the extent we need, and we need a combination of measures to make property available. We need to get vacant properties back into use and we need to see more houses being built on public land - in particular on public land. We have just finished an audit of all of our publicly owned sites throughout the country. We are speaking to other State agencies which also have landbanks that could be strategically used for housing and on some of these we are looking at affordable rental properties.