Price Fluctuations Housing Market – Finance – 12th March 2014

12th March 2014 - Bernard Durkan TD

QUESTION NO: 5

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan by Deputy Bernard J. Durkan for WRITTEN ANSWER on 12/03/2014

To ask the Minister for Finance the extent to which his Department is aware of increasing indications of inflation in the housing sector; the remedial action being considered, if any, in this regard; and if he will make a statement on the matter.

REPLY.

My Department is of course aware of price developments in the housing market.

When assessing the recent pick-up in house prices it is important to remember that residential property prices fell by just over 50 per cent from peak-to-trough and residential property prices nationally are still 47 per cent lower than at their highest level in September 2007. Indeed, while much of the attention of late has focused on the Dublin market, prices in the capital are currently 50 per cent lower than at their peak in early 2007. It is against this background that the recent appreciation in house prices must be assessed.

It should also be noted that the previous housing bubble was accompanied by a dramatic increase in mortgage lending. The same cannot be said of the recent increase in house prices, with indications that a large percentage of transactions are taking the form of cash purchases. Figures from the Irish Banking Federation show the value of mortgage lending for house purchase in 2013 stood at just €2.4 billion, or just 8 per cent of the value of mortgage lending in 2006.

As I outlined in my Budget Day speech, I am conscious that there are some supply limitations in certain urban areas. In light of this, I introduced several measures to help increase the supply of suitable residential housing stock as part of Budget 2014. These included subject to State Aid approval the extension of the Living City Initiative, to include Cork, Galway, Kilkenny and Dublin and the broadening of eligibility criteria to include all buildings built prior to 1915.

More generally, as outlined in the Medium-Term Economic Strategy, the Government will continue to work on addressing remaining challenges in the property and construction sectors. This will include developing an overall strategic approach to housing supply, identifying and implementing further improvements in the planning process to facilitate appropriate development, and seeking to improve financing options for development and mortgage provision.

Finally, I would point out that it is NAMA’s expectation, at this juncture, that its funding will contribute about 4,500 houses and apartments in terms of new supply in the Dublin market in the period to 2016. This is a significant output in the context of current house completion levels in Dublin. In 2012 just over 1,200 new houses and apartments were completed in Dublin. In addition, NAMA is overseeing its debtors and receivers who manage the rental of close to 10,000 residential properties nationally mainly apartments in Dublin. NAMA is also overseeing the sale of houses in Dublin by NAMA debtors and receivers and has made over 1,200 properties available to local authorities to meet demand for social housing in Dublin.

Price Fluctuations Housing Market – Finance – 12th March 2014

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