Somebody on the average industrial wage no longer earns enough to buy their own home, one of the State's leading experts on the housing market has said.
Dr Peter Bacon told the Oireachtas Committee on the Environment and Local Government that the relativities between wages and house prices had changed radically.
"The average industrial wage is insufficient to engage in home ownership in a way that was not the case 20 years ago," he said.
This raised "fundamental issues of income redistribution" that could only be resolved through the tax system.
He said there had been a continuation of the gradual slowdown in the rate of house-price inflation in 1999. In the first two quarters of 1998, house prices had been rising by 35 to 40 per cent annually. By the end of last year, the rate had "decelerated to around 20 per cent" on average. A factor in this deceleration had been an increase in the supply of houses from 30,000 units in 1997 to 46,000 units last year. However, prices had not stabilised as much as they might have because of an acceleration in demand factors. These included a faster-than-anticipated rate of economic growth, low interest rates and increased immigration.
House-price inflation was also intimately related to the deficit in transport infrastructure.
Delays in the planning process contributed to an inherent supply lag between when a developer acquired zoned land and when a house owner could "turn a key in the door. In many instances, in the Dublin area, the lag appears to be more than two years," Mr Bacon said.
He did not think it inevitable that the property market would crash. So long as demand was strong and the current demographic trends continued, house prices would hold up.
The Republic would have to adopt the European model of high densities in housing and cater for the associated demand for transport and other infra structural developments. How ever, roads and other mass-transit systems usually took a decade to put in place.
