Barry Cowen (Offaly, Fianna Fail)
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3. To ask the Minister for Housing, Planning, Community and Local Government his plans to stem the house-price inflation that was in evidence in the second quarter of 2017. [34099/17]

Barry Cowen (Offaly, Fianna Fail)
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The prices of newly built homes are rising much faster than the prices of existing ones. The latest myhome.iereport indicates 12.4% price inflation for new homes in the second quarter of 2017, compared with 5.3% for second-hand homes. What are the Minister's plans to stem the extreme house-price inflation evidenced in the report for the second quarter of 2017?

Eoghan Murphy (Dublin Bay South, Fine Gael)
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The residential construction sector in Ireland was severely impacted by the economic downturn, with housing output falling by almost 90% between 2006 and 2013. It is unsurprising, therefore, that the lack of housing supply and the lack of a competitive market are widely accepted as being primarily responsible for driving the high levels of house price and rental inflation that we have seen in recent years.

In order to directly influence and generate supply of new homes, the Government's Rebuilding Ireland action plan contains a suite of actions, such as the €226 million LIHAF that we just discussed; leveraging the value of State-owned lands to deliver a more affordable rental offering in rent pressure zones; streamlined planning systems for housing developments; and other planning reforms to provide flexibility to deliver viable housing schemes and apartment developments in the right locations. In addition, analysis of vacant dwellings data from the 2016 census provides strong evidence for targeted policies to maximise the number of vacant properties that can be brought back into use, especially in our cities and large towns where demand is greatest.

Recent housing activity reports, available on www.rebuildingireland.ie, show that strong supply-side measures are beginning to have a positive impact, with all output indicators showing upward trends. However, it is crucial that we continue to focus on supply and particularly the supply of homes at more affordable price points.

As part of the targeted review process for Rebuilding Ireland, I have asked my Department to focus in particular on the broad issues of housing supply and affordability for different market segments, building on the measures already being advanced under the action plan.

Barry Cowen (Offaly, Fianna Fail)
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The comparison is plain to see - 12.4% versus 5%. The huge and appalling rise in the price of new houses has to be stemmed. Depending on the actions in Rebuilding Ireland and waiting for supply to meet demand is simply not working without targeted initiatives in supply. The Minister needs to indicate to the House that he will specifically target initiatives that will have the effect of reducing the cost of construction. It is only there that progress can be made. For example, will the Minister either in the budget or earlier provide a holiday on VAT in the construction sector? Will he review planning and development fees? Will he review certification costs and the manner in which certification is carried out? Will he consider competitive finance methodologies such as putting a vehicle in place to allow private investment involving the credit unions and pension funds to fund infrastructure? These are indicators the Minister needs to show the sector he is interested in addressing. To date the failure in that regard has meant that demand has led to this spike and continues to do so.

Eoghan Murphy (Dublin Bay South, Fine Gael)
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Given the fall-off in construction which happened during the crisis from 2006 and 2013 that I alluded to, obviously supply is the crucial factor in terms of stemming inflation. As we have huge demand and do not have enough stock to meet that demand, we therefore have to increase supply across a number of fronts. Increasing supply means different things. Of course, it means building new homes. We need to work out who builds those homes and for whom. It also means managing stock. The country has a huge number of vacant homes and we also have vacant space or what might be called stranded assets above shops in towns and villages. All of that needs to be looked at. We need targeted measures through the supply of new homes and the management of existing stock.

Year on year to March of this year, completions have increased by almost 40% and ESB connections in Dublin have increased by one third. That shows that work is being done, that Rebuilding Ireland is working and that there is new supply coming into the market.

Barry Cowen (Offaly, Fianna Fail)
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With all due respect, the completion statistics are coming from a low base. Also, using ESB connections as an indicator has proved not to be the road to go down, considering that many properties have been brought back into use rather than such connections indicating new constructions. Will the Minister introduce initiatives to address the cost of construction and the criteria associated with bank lending and the rates being charged? Has he had sight of the cost of construction analysis being done by the Housing Finance Agency, an independent assessment which was requested six months ago? Where does that stand? If he has had sight of it, or if it is nearing completion, surely he would be in a position to make recommendations which would make inroads into addressing the high cost of construction. If he were to do that, he would leave room for a margin and allow prices to come down. Supply measures can have success into the future but in the immediate term we need to get some indication of the type of interjection the Minister will make in the market to stem the appalling rise in the price of new homes. As well intended as the demand measures were, such as the help-to-buy and the deposit schemes, they have had the effect of spiralling prices in the absence of supply measures.

Eoghan Murphy (Dublin Bay South, Fine Gael)
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I said ESB connections; I did not say completions. I said when I took over this brief we would stop calling ESB connections completions because they are not completions. However, any ESB connection is a good sign because it shows a new family or an individual will move into that property, whether it is new or has not been occupied for two years. It is a positive indictor. I accept it is not an indicator of a completion.

In regard to construction costs, two pieces of work are under way. One is an international comparator and the other is cradle-to-grave look at the inputs that are there for people who are building and developing. That work is almost completed and we will make a decision based on the findings of those reports. I would point to some schemes I have seen recently, for example, a scheme in Finglas which was a rapid build, the cost of delivery of which was very impressive. It involved a precast form of building which the private sector is now also adopting. When people first talked about rapid builds for social housing, people turned their noses up at it, but the private sector is also moving to adopt that model, because it is an efficient and affordable way to build. We are also looking at ways of using land owned by local authorities to try to leverage affordable homes to buy. For example, I would point to a scheme in Ballymun where the local authority gave the land away for effectively nothing, waived the development levies, organised finance through AIB and we now have 49 new homes for families to live in at very affordable purchasing price points for an area like Ballymun in Dublin.