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Central Bank report indictment of Government inaction on house prices -- Crowe

9 November, 2006

Sinn Féin Social Affairs spokesperson Sean Crowe TD has described the Central Bank's Financial Stability Report 2006 as another indictment of the Government's failure, during its nine years in office, to tackle house price increases and ensure affordability for first time buyers. The report published yesterday, highlighted the fact that houses are overpriced and Irish people are increasingly vulnerable as a result of record levels of indebtedness and rising interest rates.

The Dublin South-West TD said: "In its Financial Stability Report 2006, published yesterday, the Central Bank estimated that house prices were overvalued by at least 14%. Many would argue that this is a gross underestimation. But even this highly conservative estimate of the overvaluations would mean that houses across the state are overpriced by an average of €43,000, while houses in Dublin are overpriced by an average of €58,000, based on average house prices according to the Department of Finance Bulletin for November 2006.

"The Central Bank report warned that continuing high increases in house prices, along with mounting interest rates, is contributing to a deterioration in affordability in the housing market, and pointed out that the vulnerability of heavily indebted households to interest-rate increases has increased.

"Minister of State Noel Ahern who has responsibility for housing should pay close attention to this report and study it in detail. He has long denied the real affordability barriers facing people trying to secure homes for themselves and their families. His Government has assisted investors to the detriment of first time buyers. Due to their inaction many people have been forced to over borrow to buy overpriced and over-inflated houses. These people are now very vulnerable and this has been confirmed by the Central Bank report."


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