Alice-Mary Higgins (Independent) | Oireachtas source

The Minister mentioned 12.6% of purchases, but if we pick another 12% figure, house prices went up by 12.4% and that is an extremely high level of inflation. He will be aware that inflation in housing is a massive outlier compared with other levels of inflation. Inflation in wages does not match this factor.

While I respect that housing policy is the responsibility of the Minister for Housing, Local Government and Heritage, the fact is that the financial and fiscal policies that have applied to housing have been very strongly directed through budgetary policies. For example, local authorities were for many years precluded from building or buying because they were encouraged to lease. Even in the new Housing for All strategy, in excess of 2,000 houses are due to be provided again by leasing. These are financial decisions. Leasing has been exposed as extraordinarily poor value for the State. In the case of cost rental, again, a margin of return for investors was built in to the cost-rental model to ensure a profit. Every time we add profit into the mix, or in the case of inviting private investors in some of those areas of housing provision where we provide that the financing costs would be incorporated for them, we are effectively adding extra costs to the State, when the State could be directly accessing more of that finance, and could be getting loans at a better rate than the private sector and providing more capacity. I accept some building is now happening at local authority level, but local authorities are still being pressed into partnerships which come with an additional margin and additional cost. The policies are dictated by the market. Affordability is only a percentage lower than the market rather than affordability being based, for example, on a metric of income and what people can earn.

These are fundamentally financially irresponsible policies that the State has had. The State has had a choice where it is trying to ride two horses, one which is a property investment market and the other is accommodating the need of the public. For a long time we have been told these two horses are working in tandem and as soon as we satisfy the private investors they will provide supply. We should not be in that kind of hostage-to-fortune position.

With respect, I appreciate there will be a review of the help-to-buy scheme, but the second part of my recommendation, which is what are the policy options in terms of the deflation of house prices, what are our policies to increase housing affordability by reducing prices? How are we going to dampen this down? This is the inflation that started galloping when the capital gains tax measures were brought in and has continued apace since. It is not simply about that scheme. I do not suggest that, of itself, this is the source of inflation, there are a number of contributing factors, including the de-risking that the State has done by becoming a guaranteed customer in respect of many investment funds, but it is a factor.

The figures released by the Department of Finance showed 40% of those who benefitted from the help-to-buy scheme already had the necessary deposit. Did this just contribute, even partially, to the inflation of prices, where the deposit got them less far on the ultimate price of a house? In 40% of cases, the help-to-buy scheme was not the key determinant in them being able to reach a deposit for the purchase of a house.