Former taoiseach Bertie Ahern has said he wished the housing bubble did not happen and would, in hindsight, have done things differently to avoid the property crash.

Speaking at the Oireachtas banking inquiry, Mr Ahern said that in 2009, the International Monetary Fund said the housing bubble was “caused mainly by cheap credit due to low interest rates, along with rising incomes and a strong demand for housing”.

“There is no doubt that this created a structural weakness in the economy and the international downturn ensured this has turned from a soft landing into a very hard one,” Mr Ahern said. “I wish this didn’t happen and with hindsight, of course, I would have done things differently. I did make mistakes, I admit that but so does everyone who governs.”

Mr Ahern said he believed the fundamentals of the economy were sound when he handed over to Brian Cowen in 2008. However, he also said: “I was quite clear the level of indebtedness and lending to the property sector was growing dangerously.”

He also said he had come to the view, in 2009, that tax reliefs for construction had led to the property bubble. Mr Ahern also acknowledged there had been “some warnings about over-reliance on property”.

Under questioning from Fine Gael’s Eoghan Murphy, Mr Ahern said he thought public spending in 2007 may have been too high but claimed that he would have spent three times as much if he had listened to the opposition. He also said it was “ghastly” that about a quarter of taxation was directly related to residential property.

Mr Ahern apologised “mainly to all the people who suffered as an end result” of the property crash.

He said that during his time in office he felt public spending on the back of construction-related taxes was sustainable, with building expected to slow down rather than crash.

Asked about public spending by Fianna Fáil’s Michael McGrath, Mr Ahern said: “Was it wise? No, it wasn’t. Was it dangerous? Yes, it was.”

His government was influenced by difficulties encountered by young people in buying houses, which he was told about “non-stop and everywhere I went”.

When asked by Sinn Féin’s Pearse Doherty about the relationship between Fianna Fáil and property developers, Mr Ahern said he mainly dealt with organisations such as the Construction Industry Federation, which he encountered during social partnership negotiations.

He said it was “no secret” Fianna Fáil had a tent at the Galway Races, as well as the Listowel Races, but said these were social events.

“There was no big deal between the connections in the Fianna Fáil tent and the construction industry. It was a social occasion.” However, he said he wished he had been able to influence some people he met on those occasions.

“I wish I had known the extent of the exposure of some of those people, that they had to the banks,” he said. “I don’t believe I personally had much interaction with property developers.”

He told Fianna Fáil senator Marc MacSharry it was a mistake for Brian Cowen to do away with the fundraiser when he became leader.

He also rejected Taoiseach Enda Kenny’s accusation of an “axis of collusion” between Fianna Fáil, the banks and builders as a “a nonsense” and “a slur on the political system, which is unfair”.