Joe O'Toole (Independent)

I welcome the Minister of State to the House. This does not reflect on the current Minister of State or the Government but when one hears Government speeches about the number of houses it has been responsible for building, one has an image of members of Cabinet opening up foundations, pouring in concrete and laying a few blocks. Given that Government is blamed when houses are not built under its watch, it is entitled to take whatever credit is going for having had them built during its watch. I will pass on any criticism on that aspect.

I bounded up to House for this debate because I was curious about the Minister of State's follow-up to his comments in mid-August and whether he would talk to the Minister for Finance to sort out these greedy builders who were charging too much and shoving up the price of houses. I carefully noted at the time that the Minister of State did not tell us the measures to be taken to do that and the matter was left hanging. We all wondered during our holidays if we would return to find that house prices were lower. I mentioned in the House afterwards that the Minister who would succeed in lowering the price of houses would be out of a job in ten days. The Minister of State seems to have dropped his commitment to put manners on the Department of Finance to reduce the price of houses. He might pick up on this point when he comes back to talk to us again.

There was an old saying in Dingle that it is grabbers who make land dear. The same principle applies today. As the Minister of State will recall, the Taoiseach has said on a number of occasions over the past four or five years, although not recently, that he believes, and I agree with him on this, that not more than a dozen people have tied up huge areas of potential development land around the greater Dublin area in particular but not only there. That is also my intuitive feeling and my anecdotal evidence concurs with that. However, the problem is we do not know how this is happening. I know that in north County Dublin where I live, often a developer has an option on a piece of land. Nobody knows that because the option is not registered.

A developer may approach a farmer who owns a few hundred acres. The developer has examined the county development plans and calculates there is a good chance the land may be rezoned next time around and he buys it on that basis. Large developers buy land that does not appear to be in line for rezoning for four or five times the price of agricultural land prices. They buy the land for €80,000 or €90,000 or even €100,000 an acre and bank it because they have nothing better to do with their money. Such land purchases are recorded somewhere. The developers will hold on to the land for a few years and if the land is not rezoned they can sell it or use it for some other development.

Another development that occurs regularly is developers approach landowners whose land may be rezoned at a future day and negotiate a first option to purchase it. They pay for that option. There is a handover of cash for the option to buy the land in the event of it becoming rezoned, and once rezoned the land would be valued at the top price. Both parties win, the person selling land and the developer who then has access to it.

All this is going on and it is building up throughout the country. What happens next is that they decide how much of that land to release at a certain time in the same way as auctioneers, until very recently, released houses as if they were letting them out of prison. They would announce the release of phase 2 in a month, then phase 3, while phase 4 was still at the negotiation stage.

That tells us everything. It is Freudian because the whole thing is kept away from the ordinary consumer or punter; there is not a fair, free market. I keep telling the so-called free marketeers in politics to look at the housing market. It is a perverted and corrupted market. Whatever reservations I have about the free market, and I have many, what is happening in housing is not a free market. Developers have corrupted the basic rule of economics to do with supply and demand. They have held back supply to keep it always running just below demand or barely at demand. There is a charge for houses, competition among buyers and, therefore, the prices go up.

An issue the Minister of State has not touched on, and perhaps he might do so when he gets around to having a chat with the Minister for Finance, is the question of stamp duty. The current Minister for Finance and the previous one always said they tried to protect the first-time buyer and I believe they made attempts to do so. There are many ways in which this could be done. In a long presentation to the previous Minister for Finance I suggested giving a tax break based on the type of house, for example, properties that would be of interest to first-time buyers rather than to developers. It would be possible to build on that. Tax breaks could also be given on the basis of geographical location.

It may be a bit unfair to mention this but the Minister of State may recall his partners in Government saying recently that the Government did not need the €3 billion collected in stamp duty and obviously that would be followed up by his giving it back to us in the budget. We would look forward to that in a strange way, but getting rid of stamp duty on property is a non-runner. Given that in the Minister of State's constituency there is much more second-hand housing for sale than speculative first-time buyer housing, would he agree that it would be a good idea to abolish stamp duty for first-time buyers of second-hand houses? It would not cost the Government a huge amount of money. It would be nothing like €3 billion.

All the time we see people struggling to buy a house and if the price is a penny above the limit for stamp duty they might have to find another €30,000. There is not even a sliding scale. I am sure the Minister of State would agree that something could be done, without the Government taking a huge hit on it, to give an advantage to the first-time buyer who is having to bid against speculators or investors. Let the investors carry the cost. They can simply add it into their costs and discount it against their profit at the end. It is the one issue I thought the Minister of State might have come back to us on after his speech during the summer. I thought he would tell people like me that he had put that proposal to the Minister for Finance.

The Minister of State will recall that during the debate in the House on the abolition of the first-time buyer's grant, while I opposed the measure, I did not like what was happening and agreed with the Minister of State that builders were trousering that money in one way or another. If we abolished stamp duty for first-time buyers of second-hand houses it would be altogether different. We would be giving the first-time buyer an advantage over the investor. That is something that has never been done before. It would be a consumer-friendly, family-friendly measure and would be seen as very supportive.

On the issue of house prices, I take little notice of statements to the effect that only 10% of houses are selling at auction. Perhaps a little sense is coming into the top end of the market. However, I have been looking carefully at the population figures. Our population is growing. It grew last year by more than 2%. Our birth rate is still quite high. We have the fastest population growth in Europe. As long as the economy is growing and there are people in the country they will be buying houses and will need houses for the foreseeable future in the medium term. Demand may not quite run at 80,000 plus houses per year but it will not be that far off it.

I nearly crashed my car when I heard the latest forecasts from one of the known economists in the last three or four days. The forecast was that there would be a 6.6% growth in the economy next year. If that is the case, there is no possibility of a collapse in house prices. If the population is growing and if the wealth of the nation is growing, there will be no collapse in house prices and people should know that. House prices may slow down and I hope they will. They may even settle and that would not be a bad thing. The Minister of State's job is to try to talk softly to the building industry and say that the greedy times are over, that there will be a settling down of the market and that people will be taking a good look at value and doing what many of us on both sides of the House have been telling them to do for many years and buying for value. If it is not what they are looking for, if it does not have the space they need, they will walk away. Given our economic growth and population growth, there cannot be a collapse in the housing market unless people are going to live in tents.

In the context of speculators, investors and buyers, in a market like ours approximately 20% of it will always be in the rental sector. It will not drop below that. If anything it might go slightly above if we follow European trends in the future. I am not suggesting that we should keep investors out of the market. Much work has been done over recent years to try to put manners on landlords. That is welcome where it works, but it does not work in all situations. House prices will not drop because population and economic growth are still on the up. There will still be a demand for a significant number of houses per year.

There is an issue regarding management companies for groups of houses, blocks of apartments and so on. The Minister of State spoke in the House previously on that subject. Management companies need to be legislated for in a much more basic way. They are only marginally covered by legislation. I have looked at what happens in other countries. In France there are local committees similar to the management companies here. However, small or large they are — they might represent five or ten houses or apartments, or 200 houses or apartments depending on the building arrangements in the locality — they have an input into the planning process.

If, for example, a person wants to build an extension to a house, he or she must get the permission of the local syndicate which is established by law and has an entitlement to give approval to certain kinds of things for which one does not need planning permission in Ireland but which nevertheless might deface a house or change the style of it. In Ireland people can add a conservatory at the back and if it does not exceed a certain size and it is to the back, they may not need planning permission. The local committees in France are a bit more than management companies in this country. They are established on a statutory basis. We should examine that idea.

There is one other matter I would like the Minister of State to raise with the Minister for Finance. This is something the building industry has pointed out many times. Of the whole cost, value and output of the housing industry, 40% of it returns to the Government in taxes. That is a huge amount. Some taxation measures should be taken to bring some relief to house buyers. I do not want to see measures that will put money back in builders' pockets, but I want to see measures — I have given one example — that will give an advantage to first-time or family buyers when trying to provide the ideal situation for their families.

The last time we spoke on this issue I raised the matter of the quality of speculative housing built in Dublin. Some builders still build with cavity blocks. That is disgraceful and should not be allowed. I told the Minister for the Environment, Heritage and Local Government, Deputy Roche, that such houses will never comply properly with the demands of insulation now required by Europe. The Government has welched on the new European directive on insulation that should have come into effect on 5 January this year. It has decided to postpone it for 18 months for no apparent reason. This is anti-consumer but nobody takes any great notice of it. I raised the matter in the House this time last year. It is appalling that since 1998, approximately 250,000 houses built in the Dublin area will not properly comply with the European regulations. It is also appalling that Dublin householders are being sold poorer quality houses than people outside the Dublin area. Nobody builds with cavity blocks outside of Dublin, but they are still used in Dublin.