The Government's action programme on housing has been attacked by leading economists at the Kenmare Economic Workshop. One of the authors of the Bacon report into house prices has said the measures introduced by the Government were done "just to be seen to be doing something" and that many were contradictory.
Dr Anthony Murphy, of University College Dublin (UCD), who worked with Dr Peter Bacon on the report, insisted that the impact had been limited and that house prices would not stabilise for at least three years. He also warned that prices could even fall back after that. In his address to the conference in place of Dr Bacon, who had a prior commitment, Dr Murphy also warned that subsidies or tax breaks should not be given to house purchasers as they were merely channelled back into the price of the house and the purchaser would get no benefit.
Dr Murphy said the Government was being "amazingly silent" on the longer-term issues raised in the report. "It hasn't given any convincing or credible reason for not implementing policy quickly," he said. "In fact we do not know what is going on at all."
He also pointed out that the new income limits for sharedownership housing had not been widely advertised and no measures had been taken to increase the stock of social housing.
Ms Annette Hughes, of DKM Economic Consultants, insisted that the current slowdown in house prices was only temporary. She also called for the abolition of tax relief and for more emphasis to be put on long-term issues such as the supply of serviced land and the rezoning process. The Department of the Environment should also be better prepared for the next housing crisis, she added.
Ms Hughes said home seekers may be putting off purchase decisions because of uncertainty, but she said this would not last.
She said investors were now beginning to return to the market as rental values increased and interest rates fell.
She blamed Government for the housing crisis, saying it was due to a lack of strategic planning. Ms Hughes also criticised the Bacon report, saying its terms of reference were too narrow. She said the Government had acknowledged that the purpose of the report was to improve access for first-time buyers.
According to Ms Hughes, almost all the recommendations in the report were faulty or simply would not work.
As part of a package of measures, Ms Hughes is recommending the abolition of mortgage interest tax relief with the £50 million savings being used to improve sanitary provision in new areas.
In contrast, Ms Jane Kelly, of Irish Permanent, appeared sanguine about the future of the housing market. She insisted that the Bacon measures had had an impact on the market and that mortgage applications from investors had roughly halved.
Ms Kelly said there was very little possibility of a negative equity scenario emerging in the future. She said only 27 per cent of first time buyers borrow more than 90 per cent of the value of the home.
