Call for State to overhaul housing policy

The Government should reintroduce hefty property taxes in an effort to turn property into less of a commodity and make it more accessible to those who are currently priced out of the market, according to Prof PJ Drudy of Trinity College's economics department.

Prof Drudy also believes that local authorities should halt their sell-off of social housing and become more, rather than less, involved in the provision of accommodation.

Some 48,000 people are on public housing lists at the moment. Prof Drudy has estimated that 42 per cent of people in cities will be unable to afford a home "in the immediate future".

He pointed out that, while local authorities and not-for-profit organisations built one-third of all residences in 1975, this dropped to 10 per cent in 2002.

The rental sector is in need of urgent overhaul too, according to Prof Drudy. He believes that rent increases should be subject to greater control, preferably through a fixed link to inflation.

"The State has the responsibility to lead," he said yesterday after delivering a lecture on winners and losers in the Dublin housing system as part of the Urban Institute Ireland series.

Prof Drudy's central argument is that an affordable home appropriate to a person's needs is a basic human requirement.

He has identified "a range of serious inequalities" in the Irish property market, with Government policies - such as the removal of property taxes and the introduction of property incentives - among his main targets for blame when it comes to pricing lower-income earners or the less advantaged out of the property market.

The commercial interests that are supported by these policies have encouraged a view of housing as a "product" worthy of speculation rather than as a shelter, he argues. "The reason so many people invest in housing these days is because there is no taxation."

He acknowledged, however, that a move to reverse this situation would naturally be "worrying for politicians".

He accused developers as behaving in a "monopoly-type fashion" by retaining large land banks in the hands of a few highly profitable companies.

He questioned the situation whereby house prices have risen at a much faster pace than the price of the products or land that go into their construction.

Prof Drudy also said changes in the lending policies of banks and building societies were key drivers behind the massive house-price increases that have occurred over the past few years.