Warning over 'inflated' property prices

The Government must stop developers “hoarding away” land banks and pushing up property prices, opposition parties said today.

Fine Gael and Labour want the Cabinet to publish the findings of a 2002 Oireachtas committee report examining land ownership in the greater Dublin area.

Fine Gael and Labour have accused the Government of “suppressing” the report’s findings which could dramatically change the way developer land is bought and sold.

The Government-chaired committee, which widely consulted the constitution during its work, presented the report to the Cabinet in late 2003.

Opposition parties urged action on the report today after new property figures show that year-on-year growth rates have fallen every month since July 2003.

The Permanent TSB/ESRI House Price Index showed the average cost of a new house is nearly €250,000 – up 5.7% per compared to 8.1% last year.

But Labour disputed that house prices for average income families were falling and called for Government action on the cost of building and to put restrictions on developers hoarding land banks.

Environment spokesman Eamon Gilmore said: “The biggest social and economic issue facing the country is that families cannot afford to buy a house from their own resources.

“Today’s figures make the case for comprehensive Government action on land banks more necessary than ever.”

Fine Gael said that getting on the property ladder has been made “practically impossible” by the spiralling cost of owning your own home.

It called for the immediate implementation of the Oireachtas report’s findings.

It also demanded stamp duty be abolished on second hand homes for First Time Buyers and for mortgage interest relief to be front-loaded for the first seven years.

The party’s environment spokesman Bernard Allen said: “The Government is still paralysed into inaction about the housing crisis.”

The Permanent TSB/ESRI House Price Index showed that the annual rate of growth in July was 11.1%, the lowest figure since November 2002.

Permanent TSB said the figures backed up its forecast of 10% growth for 2004 as a whole.

A spokesman described the latest figures as ‘a welcome moderation’ and said they were driven by new properties entering the market.

House prices in Dublin were up 1.1% in July, faster than the 0.4% growth in June, while prices elsewhere rose by 0.8%.

Prices outside Dublin are showing slightly faster growth so far this year.

Prices for first-time buyers increased by 0.5% in the month, but prices for second-hand buyers were up 1.2%.

Prices of new and second-hand houses both rose by 0.9% in July. New house prices are still showing strong growth, with the annual rate of increase at 14.2%.