Housing Crisis
The Government has failed cataclysmically

By Joe Higgins, TD

During today's Leaders Questions, Joe Higgins TD challenged the Taoiseach over house prices.

Joe Higgins (Socialist Party): The Permanent TSB-ESRI house price index makes chilling reading for tens of thousands of young working people in need of homes. In March 1996, the average price of a home in Dublin was €82,000. This year, ten years later, it is €384,000, an increase of €300,000. That represents a shocking €30,000 increase per year, the equivalent of the current average industrial wage each year for ten years. Prices outside Dublin have increased pro rata. Is there any appreciation by the Government of the dire situation facing young people who earn the average industrial wage and need a home or any recognition of the hardship of young parents who are saddled with 30 and 40 year mortgages? Are members of the Government so cosseted by their massive salaries that they are oblivious to the suffering, hardship and desperation?

This happened on the Taoiseach's watch. He failed cataclysmically to stop the unbridled speculation by developers and house builders. Of course, that was deliberate. The matter goes all the way back to the devil's pact made between Fianna Fáil and house builders and speculators in the 1960s. They bought the party's councillors, who in turn corrupted planning in Dublin and, perhaps, other areas and created the nightmare we now have. They got everything they wanted. They bought the party's former leader, who the Taoiseach eulogised unstintingly last Friday. The VIP pen in the Donnycarney church was like a major house builders' convention. Oddly enough, the politicians were probably the poorest people there, with the exception of some of the Taoiseach's colleagues who are publicans, landlords or dabblers in hair dressing salons in Moscow for the Russian nouveau riche.

This is a serious situation, with a serious downside. Speculators are buying houses in working class communities left, right and centre. A frightening percentage of homes in hitherto stable communities are now rented. Stable communities are being replaced by transient communities, by people who are forced into the laps of landlords, such as migrant workers and those on rent supplement. That means, for a Government which is completely unprepared, massive pressures on services. The Taoiseach is recreating in 2006 the alienated and neglected communities of the 1970s and 1980s in what were extensive council housing estates, yet the Government is oblivious to this.

What will the Taoiseach do during the time available to him to rectify this situation, to make homes affordable and to stabilise communities so that ordinary working people can live stable lives?

The Taoiseach: As Deputy Joe Higgins knows, house price increases are primarily driven by the increase in demand for housing which has resulted from the unprecedented growth in recent years in the population and the economy. Now that we have stopped mass emigration by working class people, unemployed trade unionists and those who lived in working class communities but had to seek refuge in Australia, Canada, the United States and Britain, people are again living in the working class areas which the Deputy and I represent. Thankfully, we have moved away from the terrible blight which affected the country from the 1920s to the end of the 1980s.

The Government has taken action across a wide front to maximise access to home ownership. Thankfully, we have one of the highest home ownerships in the modern world, achieved in particular through measures which promoted a supply of housing adequate to meet demand. While house prices have increased, the cost of mortgage repayments, growth in incomes, employment, lower taxes, interest rates and availability of finance have had a positive impact on affordability. Typical outgoing as a percentage of income remains better than the position of the late 80s, as evidenced by the report published in recent days. People are taking longer term mortgages, which reduces annual outgoings. Investment in infrastructure, streamlined planning and more effective use of land have produced record housing output. Almost 81,000 houses were built in 2005 whereas ten years ago the figure was fewer than 30,000. As a result we are producing new houses at a much faster rate than other countries. Home ownership is rising and some 20 new homes are produced annually per 1,000 of population compared to five per 1,000 in the EU. Thankfully, unlike in large parts of the EU, people are buying houses.

Mr. F. McGrath (Independent): Not the people who need them.

The Taoiseach: There are issues of affordability. Deputy Higgins asked what the Government is doing. Some €4 billion has been invested in the programmes of affordable housing for this year and next year and 15,000 households will benefit under the affordable housing schemes in that period. The affordable schemes partnership will accelerate the delivery of affordable housing in the greater Dublin area where problems are most acute. Partnership is making good progress and I appreciate the effort. These are important elements of our policy to address the affordability concerns of people.

Last December we launched a new housing policy framework, "Building sustainable communities" to build on achievements, focus delivery and increase investment. This will ensure we improve the quality of housing in neighbourhoods, create conditions where housing output will meet demand and provide targeted support for those with affordability problems. Social housing is of the highest standard in the State. We will continue to allocate resources, including the €4 billion invested in the programmes of affordable housing and continue to make improvements in tax relief and stamp duty to help the less well off. As the population grows we must ensure that supply outstrips demand because that is the only way we can stem house price increases. I disagreed with those who stated that prices would go into reverse this year. We must build more houses to stop the rate of increase in prices and ensure we keep a satisfactory level of affordability for everyone.

Mr. M. Higgins (Labour): An increase of 270%.

Mr. J. Higgins: The Taoiseach said nothing that will give consolation to the tens of thousands of young workers who need homes. He said nothing to console those stuck with 30 or 40 year mortgages. In fact, he lauded the concept of longer term mortgages. Some people will be saddled with mortgage repayments into their 70s. On the Taoiseach's watch, the price of an ordinary home increased by nine times the rate of inflation. That makes a mockery of the Taoiseach's commitment to so-called social partnership and the recent national wage agreement. Whereas one part of the so-called partnership is allowed to profiteer in an unbridled fashion, workers wages do not keep pace with the price of a home for young industrial workers. If so much money is being spent on social housing, why are 50,000 families on the housing waiting list? More social houses were built in the 1930s than in recent years.

Mr. M. Higgins: That is true.

Mr. J. Higgins: That is to the eternal shame of this Fianna Fáil-Progressive Democrats Government. We do not hear a squawk from the Progressive Democrats about this. Naturally, as far as they are concerned, that is the capitalist market. The Taoiseach said nothing to indicate that house prices will stop increasing and gave no indication of a Government measure to stop the increase. Is that because the Government has no such measures or because the clatter of developers' helicopters as they descend on the Fianna Fáil tent at the Galway races is drowning out the calls from tens of thousands of young people and their parents to stop this scandal of unbridled profiteering in the housing market?

Deputies: Hear, hear.

The Taoiseach: The only way we will reduce house prices is to increase supply above demand.

Ms. K. Lynch (Labour): That is not working.

The Taoiseach: This Government has brought supply from 30,000 to 80,000 in a short period. The Deputy wants me to highlight the Government's measures but will not listen when I respond. Deputy Higgins knows that an enormous number of people are receiving assistance on social housing and rent supplements.

Ms. Lynch: They are called landlords.

The Taoiseach: Some 15,000 units will be delivered by various affordable schemes this year and next year. More than 70 sites have been identified for State and local authority owned land.

Mr. S. Healy (Independent): What about the Kenny report?

The Taoiseach: Part V will produce up to 10,000 houses under the partnership agreement. The initiative delivered 1,500 under Part V and this year it is estimated that 2,250 will be produced.

Mr. E. Stagg (Labour): Two were built in Kildare.

Mr. F. McGrath: How many were built on the northside of Dublin?

The Taoiseach: The total capital provision for social and affordable housing this year is €2 billion - more than double what it was five years ago. That includes €1.4 billion Exchequer provision, an increase of 13% on last year. Some 6,000 local authority houses will start this year, including units provided under various schemes. The needs of some 14,000 households will be met by a range of social and affordable housing. The most recent assessment of housing need was undertaken by local authorities. The results found that just under 44,000 households were in need of social housing, a decrease of almost 10% on the figure a few years ago.

Mr. Healy: Some 60,000 families are receiving rent subsidies.

The Taoiseach: The next strategy of the affordable homes partnership is under way. Des Geraghty and his colleagues are doing an excellent job of promoting that. Legislative proposals for additional powers under the partnership are being developed. The housing framework policy, "Building Sustainable Communities", includes policies to ensure an effective private housing market, increased supply and reformed social housing. Some €4 billion is allocated to that end of the market.
As always, Deputy Joe Higgins would like to bring us back to the 1930s.

Mr. J. Higgins: They built more houses in the 1930s.

The Taoiseach: Deputy Higgins loves asking questions-----

Ms. Lynch: That is his job.

The Taoiseach: ----- but never wants to listen to any answers. He would love to return to the days of-----

Mr. M. Higgins: De Valera.

The Taoiseach: -----pathetic poverty when de Valera and Lemass built social houses, when no other houses were being built. People were living in council houses and had to emigrate because they had no jobs and no future.

Mr. J. Higgins: Fianna Fáil was in power when that happened, not me.

The Taoiseach: That is the great tradition Deputy Higgins and his merry warriors want to bring back. We are building at a greater rate than the United States, Europe or the UK. We are providing new homes to the working class and young people at a rate matched by no country in Europe.

Mr. Healy: Some 60,000 families are receiving rent subsidies.

The Taoiseach: Approximately 20 new homes are produced annually per 1,000 of the population compared to an EU average of five. We are providing houses for our young people at four times the average rate.

Mr. J. Higgins: The population is increasing so that is not surprising. The Taoiseach is in the pockets of speculators.

An Ceann Comhairle: Deputy Higgins went five minutes over the allocated time.

The Taoiseach: Does Deputy Higgins wish to drag us back to a time when people had no salaries and no jobs? He has a failed ideology and the most hopeless policy pursued by any nitwit. He is a failed person who was rejected and whose political philosophy has been rejected. He will not pull people back into the failed old policies he dreamed up in south Kerry when he was a young fellow. Now go away.

Mr. B. Durkan (Fine Gael): I am surprised the Taoiseach is criticising his fellow socialist.

For further information, contact Joe Higgins at (01) 618 3038
Email: joe.higgins@oireachtas.ie