My expectation "is that house prices will rise by at least 20 per cent in 1999. From a social, economic and political point of view, this is not desirable".
This is how Jim Power, chief economist at Bank of Ireland Treasury, summed up his thoughts on the property market at the IPAV annual convention in Dublin last Saturday.
He continued: "The Bacon proposals have now been totally negated and in the absence of an ability to increase interest rates to choke off demand and dampen prices, the Government badly needs to build more houses. Significant investment and changes to the planning laws will be needed to provide the necessary serviced land and transport infrastructure to enable people to move out of Dublin and commute easily from outlying areas.
"Unfortunately, the appetite to do this in an aggressive and effective manner is lacking and there is a danger that we will be sitting here in 10 years time making all of the same arguments, and meanwhile housing will have been totally priced out of the reach of most of our children. This is not a legacy that we should leave the next generation."
The Minister for the Environment and Local Government, Mr Dempsey, didn't agree completely with this analysis. His "latest information" suggested that "the rate of house price increases has peaked and should moderate significantly this year".
He stressed, however, that increased demand for property "can only be satisfied by increased supply" and not by "subsidies, controls or any other artificial interventions". Increased residential densities at "appropriate locations" were a "key element" of the Government's strategy to increase housing supply as quickly as possible, the Minister said.
Mr Dempsey also said recent interest rate reductions "could prove detrimental to the housing market" if mortgage lenders "irresponsibly increase" access to funding before housing supply matches demand.
The new president of the IPAV, Mervyn Lloyd, reported a "slower rate of price increases than in 1998".
"A levelling off in property prices is to be welcomed, as we aim to establish a balance in the market between supply and demand," he said.
"That balance is still some way off, particularly in and around the Dublin area, where it is going to take a number of years to meet the demand."
As a result, the IPAV president called on the Government to look outside the Dublin area for a solution to the capital's housing crisis.
"We have to accept that demand for housing in Dublin is always going to outstrip supply. Therefore, the obvious solution is to reduce the focus on Dublin as the centre for everything and to look to decentralisation of business to reduce the demand for housing in the city.
"Successive governments have paid lipservice to the development of satellite towns. None have been willing to pursue the fundamental shift in policy necessary to see the emphasis move away from the capital. Counties who will be still in receipt of Objective One funding will have generous EU grants available and are well placed to develop the infrastructure necessary to attract industry."
MR LLOYD also welcomed the introduction of "longer term mortgages for younger applicants" aimed at reducing monthly repayments. He also could "see the case for increasing the two and half times the salary guideline to three times" but had reservations about "100 per cent funding becoming the norm" as this could "put us close to the British pre-crash situation".
Welcoming increased housing densities, Mr Lloyd said: "High density does not necessarily mean high rise. With good, well planned design, it is possible to have excellent residential density without going above three storeys."
He also "strongly welcomed" changes to the Rural Renewal Scheme that came into effect on April 5th. Counties included in this scheme are Longford, Leitrim and parts of Cavan, Sligo and Roscommon.
