Fergus O'Dowd (Louth, Fine Gael)
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Question 265: To ask the Minister for the Environment, Heritage and Local Government his views on the degree to which investors and owners of second properties have inflated house prices since 1997; his further views on whether measures should be taken to ease this; and if he will make a statement on the matter. [11308/05]

Noel Ahern (Dublin North West, Fianna Fail)
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The unprecedented demand for housing, fuelled mainly by rapid economic growth and demographic changes, has been the major driver of house price increases in recent years. While precise information is not available, it is clear that there has been significant activity over this period by investors and owners of second properties. This is to be expected in a growing economy. While at different times and locations this may have an impact on prices, there can be gains in terms of the supply of private rented accommodation, tourist accommodation or the revitalisation of areas.

Against this background, the Government's strategy is to increase housing supply to meet the diverse demand. A particular focus of attention is on measures to improve affordability and access to housing for new households. While we have taken measures in the past to quell demand by limiting potential for investment, this was necessarily short-term in recognition that action undertaken to increase the housing supply would take longer to have effect in order not to disturb the supply of private rented accommodation in the long term. Focussing on sustaining supply at levels to meet demand is the key objective of policy. In this way we seek to bring moderation to house price increases.

The success of these measures is demonstrated by the substantial increase in annual output of newly built houses, which has almost doubled in the past seven years and house prices have moderated somewhat from their high levels in the late 1990s. The consensus among market commentators is that the general trend in moderation of prices is likely to continue in 2005. I am pleased to say indicative data available to the Department suggests strong activity by first-time buyers in the housing market. We will continue to monitor and review housing developments and policies as necessary.