Noel Ahern (Dublin North West, Fianna Fail)

I thank all the Members for their comments and general support for the Bill. We all share Senator Browne's views on affordability but "affordable" often means whether one thinks one house is affordable by comparison with another. Just because I bought a house 20 years ago does not mean I think it is affordable. To measure affordability one must look at some of the estates where these units are built and compare the price of an affordable house to one sold privately by the developer. If one gets a house for €200,000 and somebody else buys a house across the road for €290,000 then one is not doing too badly.

Affordability can mean different things. There is an affordability index, which is not published, although different exercises have been done with regard to it. What is affordability? If one were to say price does not matter, one would be rubbished. It is affordability that counts, and the normal test of affordability is the percentage of disposable income which goes towards one's mortgage.

Houses are slightly less affordable than previously, but it depends on the year under review. Houses are more affordable today than in 1992. Again, if I said that outside this House, I would be rubbished. However, it is a fact. We had a general election 1992 and interest rates were at16%. People were paying enormous mortgages. An extremely high percentage of take-home pay and disposable income went towards mortgages. We experienced devaluation in 1993 and mortgage rates went way down. Suddenly houses were much more affordable. The graph has been up and down. Houses are less affordable than in 1993 but more affordable than in 1992. The best test is what percentage of one's disposable income is spent on one's mortgage. If it was not for historically low interest rates we would be in big trouble. It is not fair that developers got the huge dividend from the fall in interest rates. However, that is life.

Senator Browne mentioned that affordable housing is generally perceived as being for people who are socially disadvantaged. That perception is wrong. Social housing is for people who are socially disadvantaged. Affordable housing is private housing for people in a particular income bracket who want to buy their own homes and who always would have bought their own homes, but are under pressure and need State assistance. It is for individuals in a particular income bracket of average industrial pay or slightly lower, not for those who are socially disadvantaged.

I release a lot of facts regarding what is built and what is undertaken. Certain people in the media and in both Houses continue to misrepresent the Department. There has been much hype about the figure of 315 houses, now 390, that have been delivered under part 5 of the scheme. That is one of four affordable housing schemes. A total of 2,600 affordable houses were built last year, and hopefully it will be a similar figure this year. Those houses came under the shared ownership and 1999 schemes and are well established at this time. The figures of 315 and 390 are from the part V scheme, which, like all schemes, has been slow to get up and running. There is no magic wand in housing. It can take up to three, four or five years from the time a policy is determined to the time it is fully established. This applies in the case of any developer, whether he is building private, social or affordable housing. It can take approximately four years from the day he gets the site to the day he hands over the keys.

Senator Browne spoke of 52,000 people on waiting lists. I do not know where he got that figure. The correct figure, which I acknowledge is high, is 48,000.

The abolition of and reduction in stamp duty will help considerably. Young people, as potential buyers, are extremely pleased. Media reports now say the cost of second-hand houses is jumping up as a result. I remain to be convinced of this. Until recently, the deposit and stamp duty discouraged first-time buyers from buying second-hand houses. They have been concentrating on the new house market. Approximately 40% to 45% of new homes are bought by first-time buyers. Changes to stamp duty will encourage some first-time buyers to move into the second-hand market and there will be a certain rush of interest in that area. The corollary of this is less pressure in the new house market. We cannot have it both ways. If there is a rush of people from one market to another, there will be more pressure for second-hand houses but less pressure for new houses. It should balance out after a few weeks or months. Those measures are of great benefit.

The average price of a house in Dublin may be over the limit of €317,500, but that represents the average price of all houses whether new or second-hand, including those which are extremely expensive. It includes the new house which sells for €1 million and the second-hand house which sells for €3 million. They are in the mix of this average. Unfortunately, there is no published figure stating the average price of a starter home in Dublin. While the average price may be over €317,500, the average price of a starter home certainly is not. On the north side of the city, with which I am more familiar, plenty of starter homes are priced well below that average. In my job I have the pleasure of opening many new housing estates. I was in Balbriggan a few weeks ago opening an estate of houses priced between €140,000 and €160,000. There was no publicity about it whatsoever. These were starter homes and looked lovely. People will only talk about the price of the average home. However, that price includes mansions and new and second-hand homes bought by people with plenty of money.

Senator Kitt spoke about the overall housing market. It is about supply, supply, supply. Some 69,000 homes were built last year. That figure will be in excess of 75,000 this year, although some have predicted 82,000. We will probably have the final figure by early February. Throughout the 1960s, 1970s, 1980s and into the early 1990s, the figure wandered up and down between 20,000 and 30,000. In 1993, 22,000 homes were built in Ireland. In 2004, 68,000 homes were built, and 75,000 will be built this year. This is an enormous figure. No other country has managed to increase its house production to such an extent. There is an international index which shows the number of new homes per thousand of population. We are building just under 19 new homes per thousand of population per year. Spain and Portugal are next, the UK is at three, and Sweden is at one. The census, on which constituency revisions are based, shows the population increased by 8% in the six-year period up to 2002. I do not know of another country whose population — I am not referring to the population of a city or suburb — increased by that amount.

On further analysis of those figures, the number of people in the 20 to 35 years age group, the key age group for household formation, increased by approximately 18% in that six year period. Many of the people in that age bracket emigrated in the 1980s when they were aged 21 or 22 years and lived with their parents. They returned ten or 12 years later with a husband, wife, boyfriend or girlfriend and possibly a baby seeking to buy their own home. The rise in the population and in that particular segment of it is contributing to our Celtic tiger economy. They are all young, healthy, busy, working and that is marvellous, but the increase in population has exerted major pressure on the demand for housing. In many ways such pressure is a negative by-product of the booming economic growth here over several years. We are getting there when house figures have increased from 22,000 to 75,000 in ten or 11 years, which represents a sharp increase.

Senator Kitt referred to the claw-back charge. It is right and proper to provide for such a charge. People are being given a site or a house at a much reduced value. The claw-back charge applies in the event of the resale of an affordable house. It is necessary to guard against profiteering. The Bill will enable the claw-back charge to be secured, irrespective of whatever source of finance is used. A person is given an affordable house at a value minus the cost of the site or at a value where the cost of the site is much reduced. It is appropriate to claw back that value if the purchaser sells the house. The full value can be clawed back if the house is sold within the first ten years following which a sliding scale will apply for up to 20 years.

Senator Kitt applauded the work of local authorities in regard to social housing. In this context, the performance of some local authorities has been good while that of others has not been so good in recent years. We are agreed that local authorities require certainty of funding and a multi-annual approach to it. In the past local authorities were often advised in January, February or March of the number of houses they could build in that year, but that approach is no good. They need to have a long-term view of what they can build. In more recent years local authorities have been given a four-year multi-annual programme, whereby they know what they will be allowed to build and what they agree they can build. We are putting in place secure funding for local authorities. Those two measures have been introduced together with the introduction of action plans, which will provide local authorities with plans for the next four or five years. The capital envelope for this area is €6,000 million up to 2009 which should result in a great deal of good work.

Reference was made to an article on this area in one of yesterday's newspapers. Many talks are taking place. As well as the four affordable schemes, we are exploring other proposals with the industry. There is no announcement on that, but different possibilities have been suggested and different proposals are being examined. A task force comprising of the four managers of the local authorities in Dublin has been set up and it is working with the industry exploring if there are other ways of maximising and bringing forward more quickly the supply of affordable homes which could be sold directly by the developers or the builders to house buyers rather than through the local authority system.

In regard to the price of land, the All-Party Oireachtas Committee on the Constitution prepared a report, I do not know if it has been debated in this House. It will probably be debated in both Houses together with the Goodbody report and the NESC report, which have not yet been but are due to be shortly published. A commitment was given in the other House that when those three reports are published there would be a detailed discussion on them. I believe that will happen soon. These reports, when published, will go into all aspects of housing, the price of land, the hoarding of land and other related issues.

Senator McCarthy referred to the withering rule. We changed it two years ago to encourage an increase in the supply of houses. There was talk two years ago that builders were going to run out of planning permissions, of which they had built up a fair stockpile. They only had a two-year lifespan at that time. We could have become involved in a major argument with the building industry but we changed the rule and gave those applications the longer life that would apply to a normal planning application in order to encourage an increase in the supply of houses. On a temporary basis that measure reduced the dividend coming forward for social housing. I accept that, but it resulted in an increase in the supply of houses. No success would have been gained from having a war of words with the building industry which would have resulted in no houses being built. We made a judgment call which delayed the dividend coming forward, but that resulted in our getting a good supply of houses. With the provision of 68,000 to 75,000 houses, it is not a buyers' market yet, but it is getting close to it.

I am not sure whether Senator McCarthy deliberately mixed up the Part V rule with measures under Sustaining Progress. The shared ownership scheme, the 1999 scheme, the scheme under Part V of the legislation and the scheme under Sustaining Progress are the four schemes in this area. The Senator referred to the provision of 315 houses under the Part V scheme. Some 390 houses have now been produced under it, work on more than 1,800 is in progress and deals are being negotiated in respect of 2,700. While the figure of 300 is miserable, some 1,800 houses are under construction. By next year the number of houses produced under Part V will be substantial and by the following year provision under that scheme will be in full flow. It takes a while to have completions. For good or bad, two years ago builders laid many foundations, built up the walls and left the houses in that state and thereby avoided paying the levy. Then the withering rule was extended. The planning permission for most of the houses that have come forward this year and last year were secured three or four years ago. That is the reason the dividend from Part V has been slow up to come forward up to now. The 1,800 houses under construction may not all be finished next year, but most of them will be. The provision under Part V will also be good from next year onwards.

Under the scheme under Sustaining Progress State lands have been offered in this respect, namely, some 70 patches of such lands. None of the houses proposed to be built on those sites have been started, but that announcement as part of the pay deal under Sustaining Progress was made only 16 or 17 months ago. They cannot be a burden on the Exchequer. The advertisement in respect of the St. Bricin's Hospital site as part of a proposed development for O'Devaney Gardens has been placed. Advertisements have also been placed in respect of Jamestown Road and Infirmary Road sites. The Harcourt Terrace site involves a land swap. Advertisements issued have sought for expressions of interest. Progress is being made. It will probably be 2006 before a sizeable number of those lands become available but they will become available. The first step is to acquire the site. We have identified the sites for in excess of 10,000 houses. Once the sites are established, we can plan ahead and start things moving. Much of the land in this regard is in other use and much of it is not serviced or zoned. It will be a few years before some of it becomes available. We are working on a number of sites and there might be a small dividend from that next year. It will probably be 2006 before most of those sites become available, but they will become available.

Senator Brady referred to the sales scheme and what Dublin City Council has in mind in that respect. I believe in that scheme. Right-wing economists and such like think it is stupid to sell our housing stock. Those on the left are now objecting to Dublin City Council's plan. It is quite extraordinary that for different reasons the two extremes of the political divide have reservations regarding sale schemes and that most sensible people in between support them. When the NESC report is published, and it examines the issue in some depth, those who support sale schemes might be needed.

One cannot have a sale scheme involving voluntary housing. I hear objections all the time from people in such housing who would like to buy. However, the housing associations, perhaps dominated by the big ones, are very strongly against allowing their tenants to buy. Tenants in smaller associations down the country should lobby through their housing association for more flexible arrangements. The Irish Council for Social Housing, which represents voluntary housing, has very strong views and is against tenants buying out units. Some of them should have been co-operatives.

Senator Paddy Burke stated that there should be an incentive for people to buy their affordable houses. However, an affordable house is for somebody who cannot afford to buy a house on the open market because his or her income is too low. The State gives such people a site free or at a much reduced price. If they do better later in life they will be able to sell, pay the claw-back and buy a house on the market. I accept that in five, ten or fifteen years paying the claw-back might restrict entry into the private market. However, nobody comes to affordable housing if they are able to buy on the private market.

The Senator was not referring to 1985. That was a different issue involving a scheme introduced by the Fine Gael-Labour Party Government. That scheme seemed like a good idea at the time, given that houses cost approximately £22,000. In Dublin people were given £5,000 plus mortgage interest relief. Many people got a lump sum of £8,000 to buy a house at £22,000. The scheme was so successful that people were handing back their keys to local authorities at a rate of knots. It created a huge supply of local authority accommodation. In my constituency there were approximately 300 vacancies in a certain flat complex and there was nobody to whom to allocate them. It was so successful that it denuded estates of anybody who had a job and left behind people who did not have a job. It was a well-intentioned scheme and I probably thought it was a good one when I first heard about it. However, it did much damage and it took many estates years to recover lost ground. The affordable housing scheme is totally different.

Senator Moylan spoke about the Respond Housing Association. I have dealt with that. Senator Kitt mentioned the lending institutions. He must not have a very nice bank manager. I do not believe there are many repossessions in Ireland. I am told that house repossession in Ireland is one of the lowest in Europe. It may be that the Senator knows of one or two cases where there was not much understanding. If people get in contact at an early stage, most financial institutions are reasonable provided MABS or some other organisation is helping.

I am sorry to be so long-winded. There were many points to be responded to. I thank Senators for their support and co-operation in dealing with this Bill so quickly.