Paul Kehoe (Wexford, Fine Gael)
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Question 78: To ask the Minister for Finance if he has assessed the affordability of house purchase for young families in view of the 40% increase in the cost of mortgages in the past twelve months and its implications for Government policy. [39151/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Central Bank's recently published Financial Stability Report noted that increases in both house prices and interest rates are contributing to reduced house price affordability. While the Report also shows that estimated mortgage repayments as a percentage of disposable income have varied over the past sixteen years, the current mortgage repayment level on a national basis is less than 35 per cent, which was the level during the early 1990s.

The Deputy should note that Irish house buyers benefit from a range of supporting factors, including healthy income growth, low income tax rates and relatively low levels of interest rates by historical standards. Affordability is also supported by the strength of the economy, record employment levels and relatively high savings rates. Recent indicators point to continued moderation in house price inflation in line with increased housing supply and higher ECB interest rates. The consensus among commentators is for this trend to continue, resulting in a gradual cooling and soft landing for property prices in Ireland. The Central Bank's report shares the view that this is the most likely outcome.

The Government's housing policy also tackles issues of affordability through supply side actions. Maintaining the pace of housing supply, in line with our future demographics requirements, is a primary objective of Government policy and has a critical role to play in securing balance in the marketplace and supporting affordability, particularly for first-time buyers. The Department of the Environment's Housing Policy Framework outlines Government plans to reform the social and affordable housing sectors and to support the expansion of home ownership. We are working towards building sustainable communities through a capital investment programme of EUR4 billion over the next three years. Budget 2006 further supported these initiatives through the expansion of social housing options and the full implementation of the private sector's Rental Accommodation Scheme.