Noel Ahern (Dublin North West, Fianna Fail)

One can either do that or get on with the job of providing houses. That is what we are doing under the affordable homes partnership, because that group, chaired by Des Geraghty, is making good progress on the implementation of its work programme, including advancing certain affordable housing initiative projects on State lands. I mentioned Harcourt Square in that regard. Given that the pilot project has yielded value for money, and resulted in significant time savings in the delivery of completed affordable units, the partnership will be employing the swap mechanism in further areas.

At national level the Department initiated a comprehensive programme of active land management by local authorities. The affordable homes partnership invited submissions last November from parties interested in providing and developing land primarily for affordable housing. Several of the submissions received are considered to be appropriate from a planning point of view. The partnership is now engaged with the promoters of these proposals in order to work up more detailed development agreements. The basic purpose is that land will be made available at a cheaper cost per site.

I accept Senators' remarks on house prices and there is no doubt they have risen sharply. In the past several years I noted a 10% rise in one year and then 7.5% in the following, with experts declaring the rise would be further reduced to5%. In the middle of last summer, house prices took off again. We are in a spiral of increased house prices which I am concerned about. Depending on who one listens to, the rise varies between 13% and 15%. I hope this upward spiral does not last much longer. I agree with Senator Ross that much of it is due to the financial institutions. In Ireland many people borrow from the banks when in other countries they do not. The institutions are shovelling money at people.

Senators referred to the affordability index contained in yesterdays' newspapers. Although it is difficult for many people now, homes were less affordable in 1992. It did not last long as the punt was devalued and homes subsequently became more affordable. Another factor that must be remembered is that people have eased their affordability problems with 30-year old and 40-year old mortgages. All the extra gimmicks offered by the institutions such as 100% mortgages, interest-only and inter-generational mortgages, can help someone's affordability problem in the short term but they add a large amount of debt in the long term. I no longer blame the developers for increased house prices. It is the fault of the financial institutions. If people can secure larger mortgages, they would be foolish not to avail of whatever is going. I am concerned about the annual house price increase of 15%. I hope this spiral will end quickly. A 0.25% or 0.5% increase in mortgage interest may bring people to their senses. That should not create large difficulties if these mortgages have been properly stress-tested. All along we are told they have been but I sometimes wonder.

I announced yesterday that funding of €942 million, an increase of €100 million, is to be provided for local authority housing. Senator McCarthy referred to the difficulties with social housing in Bandon, Schull and Skibbereen. It is up to the local authorities to bring forward housing schemes which the Department will fund. However, many local councillors want their areas to remain exclusive and are not proposing local authority housing projects to the Department.

Much cheap social housing was built in the 1960s and 1970s. I refuse to take that route. Every year €250 million is spent on remedial works and regeneration schemes, trying to put right many of the problems in these older estates. In the 1970s vast estates, some with up to 500 units, were built on greenfield sites with no proper facilities, such as a footpath to a bus stop.