Housing prices may rise by 25%

House prices will have risen by 25 per cent by the end of the year, signalling the failure of measures to tackle the housing crisis, a conference in Dublin was told yesterday.

Ms Marian Finnegan, an economic analyst with auctioneer Sherry FitzGerald, told the conference, that while external economic indicators remained broadly good, there remained the possibility that the current boom could be undermined by the housing situation. The conference was held to introduce a report by the Labour Party Housing Commission.

Ms Finnegan said the problem was the result of successful economic policies which had been deployed in the late 1980s and early 1990s, but because of the currency crises in the early 1990s it was not generally appreciated that these policies were working. With currency devaluation and lower interest rates a logjam had been broken.

In spite of the Bacon report and the subsequent removal of tax breaks for investors there is "no indication that house price increases have reduced significantly. This year our own research leads us to believe that the rate of increase will have been around 25 percent", she said.

According to the report the main factor attributed to the housing price increases was demand. While there were 6,850 acres of building land in the Dublin area, more than half of it was unserviced. The report also highlights the lack of an adequate commuter rail network in the Leinster region.

The party spokesman on environment and local government Mr Eamon Gilmore said the provision in the Bill for social housing would take at least three years to deliver a single house. Therefore he would table an amendment that "20 per cent of development land will be made available for social and affordable housing from a current date" thus avoiding the proposed situation where the social housing provision comes in when planning permission is granted.