Government 'letting developers dictate housing market'
The Government was today accused of letting developers dictate the housing market as one of the country’s largest banks warned the average cost of a home will hit €400,000 by 2006.
Opposition TDs said developers, investors and banks were pricing young people out of the market.
Labour Party chief whip Emmet Stagg accused bankers of being out of touch with the realities being experienced by many young families.
“It is difficult to understand how inflation in the housing sector could be running at three times the rate of inflation generally and it suggests that there may be an unacceptable level of profiteering going on in some sections of the construction industry,” he said.
“The reality is that affordability has long ago become a problem for many buyers, with even couples with two good incomes being pushed to the pin of the collars to find a home they can afford.”
Sean Crowe, Sinn Féin TD for Dublin south-west, backed that view and questioned who controlled the sector.
“It is clearer than ever that housing policy in this state is no longer in the hands of the Government, but is controlled by developers, property speculators and the banks,” he said.
Mr Crowe said it was vindication of his party’s policy to bring in capital gains tax at a rate of 40% for second homes. And he accused contractors of failing to meet their commitments to supply 20% social and affordable housing on each new development they build.
“This shows who is driving housing policy in Ireland. It is not driven by need, nor the requirements of the almost 44,000 families on the housing waiting list,” he said.
“It is driven by the interests of the inhabitants of the (Fianna Fáil) tent at the Galway races this week.”
Bank of Ireland’s Irish Property Review, a quarterly analysis of the market, predicted 2006 will set new records in terms of house prices, completions and mortgage lending.
Higher interest rates look like the only way the market will cool, the review noted, and anyone looking for a slump will be forced to wait until 2007 before there is any sign of a slow-down.
Dr Dan McLaughlin, group chief economist with Bank of Ireland, said: “Prices have certainly risen at a surprising pace of late, particularly as the market appeared to be stabilising twelve months ago.
“Price inflation re-accelerated towards the end of last year and in 2006. On that basis, our previous forecast of a 9% price rise this year is too low and we are revising that up to 12%.
“This would put the price of an average house nationally at around €395,000, from €352,000 at end-2006, with Dublin prices at €532,000.”
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