Government accused of ignoring increase in house prices

Opposition spokesmen have accused the Government of ignoring the problem of rising house prices, following a new report which indicates many people cannot afford to buy a new home.

The report from economist Dr P.J. Drudy claims almost one third of potential house buyers will not be able to afford a new house in two years' time.

In Dublin the figures are even worse, according to Dr Drudy who predicts that almost 50 per cent of the numbers requiring housing will not be able to afford to buy their own homes in two years.

Dr Drudy found that house price inflation was continuing to outstrip wage increases by between 8 and 16 per cent annually. While many cannot now afford to buy a house, there is little chance of saving for a better position in the future.

Dr Drudy also claimed much of the cost of houses was going in excessive profits to landowners, and a range of industry professionals including solicitors, estate agents and mortgage advisers.

The report also criticised the Government which Dr Drudy said was taking a huge cut in stamp duty and VAT - and the higher the price, the greater the revenue.

The Labour Party spokesman on the environment, Mr Eamon Gilmore, said the report pointed out "in the starkest possible terms" the scale of the problem now facing working people trying to buy their own homes.

"The reaction of the Fianna Fáil/PD Government has been to ignore the problem and to refuse to take any action to control the cost of housing, lest it reduce the profit for builders and speculators."

Mr Gilmore said the report showed that a couple in the Dublin area would now need a combined income of €90,000 per year in order to buy a new home. "If, as Dr Drudy suggests, the cost of building an average house in Dublin is €100,000, then somebody is ripping off the purchaser who is required to hand over €300,000 for the same house. This is the legacy of seven years of the PD Government."

Ms Mary Lou McDonald, of Sinn Féin, said "everybody knows land speculators and developers are ripping off the people of this State and that this Government doesn't have the guts, or isn't interested in standing up to them".

However a spokesman for the Minister of State for Housing, Mr Noel Ahern, insisted the Government was tackling the problem.

Pointing out that more than 70,000 new homes were built last year, the spokesman said the "central focus of our policy is on supply, particularly in the area of social and affordable housing. The figure of 70,000 homes is five times the per capita rate of home-building in Britain and efforts will continue to get supply equal or as close as possible to demand."

The spokesman said the Government had identified a number of State-owned sites which would reduce the cost of land and make new homes more affordable.