No sign of ceiling for soaring costs

Even though the Government promised to tackle rising house prices, they continue to rise.

In the last six months they rose by 6.9%, compared with 5.6% over the first six months of 2002, but this was slightly down on the 7.1% rise during the second half of last year.

House prices have rose by 14.7% over the past 12 months.

During the month of June they rose by 1.1%, which was down on the 1.7% rise in May and the 1.3% increase in April, but up significantly on the 0.5% rise in June of last year.

The average price of a house is now €220,000, up from 191,891 this time last year. Prices still continue to rise faster in Dublin than anywhere else in the country.

The average price in the capital is now stands at €292,359, which amounts to an increase of over 235% in seven years. Outside of Dublin, prices are rising fastest in the commuter counties of Kildare, Meath and Wicklow.

One positive indication has been a drop in the

demand for new houses. Last year, 57,500 houses were built, but the demand was only for 52,000. Most of the growth in prices has therefore been for second-hand houses. For instance, the cost of new houses only rose by 3.3% compared with an 8% rise in the cost of

existing houses.

There has also been a significant need for apartments in the Dublin area, where the demand has jumped about eight-fold over the past three years.

The cost of houses and apartments are not included in the Consumer Price Index, so we are getting a somewhat false reading in the actual trend of inflation, because younger people entering the employment market are inevitably going to have to earn more to pay for their housing.

The Government’s much hyped initiative to provide affordable houses has so far been as illusionary as its election promises. The €21 million being allocated for affordable housing is being spread over more people, which means that the actual subsidy will be smaller for everybody and only those who are relatively better off will be able to avail of the scheme.

The Taoiseach told the Irish Congress of Trade Unions earlier this month that 309 acres of State land was being made available for affordable housing in Dublin, Kildare and Meath.

He promised 10,000 houses, but this will require much more land or a substantial increase in the 21m that the Government allocated in each of the last two years.

In Cork city, where 40 houses are planned for this year under the scheme, there were 700 applications, so the right to buy was raffled.

If this is to be the practice around the country the whole thing will amount to little more than a national lottery for the right to buy a house at a discount on an already inflated price.

Instead of providing lower cost housing the effect of this scheme so far has been to subsidise prices to keep them up. No wonder the Fine Gael environment spokesman, Bernard Allen, described the scheme as “pure hypocrisy”.