‘House plan won’t create bubble’

A new housing bubble will not be created by Government home-building plans, Finance Minister Michael Noonan has insisted.

‘House plan won’t create  bubble’

Moves to triple construction to 25,000 units per year by 2020 and offer State help to first-time buyers sparked concerns that property prices could again become artificially inflated.

Independent Wexford TD Mick Wallace said that the Government should concentrate on social housing, rather than initiatives which would see the State underwrite some borrowings of new buyers.

“There is a fear now that any Government monies spent on increasing demand will only facilitate another property boom and the banks,” Mr Wallace told the Dáil.

“We do not seem to be able to encourage banks to lend as much as they should without the provision of some sort of subsidy by the Government. The elephant in the room, and the reason supply is so poor, is that the Government no longer builds social housing.”

Mr Noonan said that a review into selling of more Nama properties would take place in the next few months.

“We are so far away from one of these unsustainable building booms that I do not know why people talk about it. People can only analyse things through the lens of the past,” he said. “They would want to start looking at the future and ask what we can do to put 25,000 houses a year into this country again when last year we built 8,000.”

“This initiative is not a demand-side initiative, because we are not applying it to second-hand houses. If we introduce this, it will be for new houses only. The initiative in the United Kingdom has increased the supply of new houses outside London by one-third in the two-year period since it was introduced,” Mr Noonan said. Meanwhile, Sinn Féin’s Peadar Tóibín urged the minister to ensure the Oireachtas banking inquiry be provided with a letter by ECB chief Jean Claude Trichet letter of November 2010 to then finance minister Brian Lenihan regarding the financial collapse. “I am very concerned at the minister’s refusal to say whether or not he will release the letter, even to the banking inquiry,” Mr Tóibín said. “The Irish people expect the truth in this inquiry. Mr Noonan said: “As regards the release of the letter to the banking inquiry, any request which may be received from the inquiry will be considered, taking into account the terms of reference of the inquiry. The issue is that international communications are excempt from Freedom of Information. Personally, I have no problem with whether it is released. It is like the third secret of Fatima — people will be a little disappointed when they see it.”

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