Thursday, 29 June 2000
Dáil Eireann Debate
2. Mr. Gilmore asked the Minister for the Environment and Local Government the average price of a new house in Dublin at the end of the first quarter of 1997; the average price of a new house in Dublin at the end of the first quarter of 2000, or on the latest date for which figures are available; when he intends to publish housing statistics for the first quarter of 2000; and if he will make a statement on the matter. [18844/00]
Minister of State at the Department of the Environment and Local Government (Mr. Molloy): According to my Department's house price data, which compile average house prices on the basis of loan approvals by all mortgage lending agencies, the average price for a new house in Dublin in the first quarter of 1997 was £84,001, while the average new house price in the first quarter of this year was £162,044. The average mortgage interest rate in the first quarter of 1997 was 6.9% and in the first quarter of this year it was 4.6%.
While average house prices have increased significantly over this period, the Government has acted decisively to restore balance to the market and my Department's house price statistics show a welcome moderating trend in house price increases which, given the continued very strong demand for housing, is firm evidence of the effectiveness of measures taken by Government to address the issue.
Average house prices for the first quarter of 2000 indicate a significant moderating trend of price increases on previous quarters, with Dublin house prices showing reductions of 1.1% and 2.7% in the average prices for both new and second-hand homes respectively, the first quarter that average prices have dropped since 1995. Year on year house price increases – March 2000 compared to March 1999 prices – are also significantly lower than in previous quarters, with annual new and second-hand house price increases in Dublin of 13% and 17%, well below the peak inflation rates of 37% and 41% respectively in mid-1998, just prior to the publication of  the Government's policy document, Action on House Prices.
Mr. Gilmore: Is the Minister of State satisfied that, in the period in which he has been in office – the period to which the question refers – the average price of a new house in Dublin has doubled? With regard to his comments about the first quarter of 2000, has the Government adopted a policy aimed at reducing house prices? Does he intend to reconsider current housing policy given that the third Bacon report, and the Government's response to it, is generally regarded as not being capable of addressing the housing crisis in its totality?
Mr. Molloy: All the actions we have taken have had a positive effect on the market. There is a strong demand for houses and the only permanent solution to this problem is to bring the supply of houses into balance with the level of that demand. That is what we have been seeking to do. In the meantime we have taken measures which will allow the market to cope with this extraordinary level of demand and the resultant increases in house prices and rents.
On many occasions I have expressed my dismay at the level of increase in house prices. However, I entered office only in the middle of 1997 and the Deputy must recognise that it usually takes one or two years for decisions relating to the housing area—
Mr. Molloy: —to take effect. House prices were already on the increase before the previous Government left office. We have taken effective action in respect of this matter and the level of increase in house prices has decreased since the middle of 1998, when the situation reached its peak. We intend to keep a tight rein on matters because the other factors which influence this area are artificial and their effect will be temporary.
It is forecast that the high level of demand for housing will continue for some time. We intend to ensure housing output is increased from the very low level which obtained when we took office up to the extraordinary high level of 55,000 to 56,000 houses per annum. In my opinion it is possible to achieve that level of output and various measures designed to ensure it is achieved were published two weeks ago.
Mr. Molloy: We have taken measures in respect of infrastructural improvement, planning matters and the various constraints and obstacles responsible for restricting housing output. These measures are beginning to free up the market and make it easier for developments to reach the commencement stage. I am sure we will achieve the extraordinarily high targets we have set for ourselves.
Mr. Gilmore: The Minister of State placed particular emphasis on a number of the first quarter results for 2000 which show, in certain instances, that there has been a decrease in house prices. Will he indicate if it is the Government's policy to reduce house prices?
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