Budget will not weaken house market - Lenihan

MINISTER FOR Finance Brian Lenihan yesterday rejected suggestions that the announcement of an early budget would make a bad situation in the housing market even worse.

Mr Lenihan said the housing market was in a "very weak and perilous position", but the best way to deal with it was through an early budget.

Responding to claims that buyers and sellers would now hold off for another seven weeks in anticipation of changes next month, Mr Lenihan said an early budget was "a better idea in terms of laying out the framework of exactly where the country should be going".

He stressed that any intervention in the housing market would have to be "very, very carefully calibrated and that's on the assumption that we will take any steps.

"Let's remember this about the housing market - it is a market like any other market that is going through a process of adjustment. That adjustment has to take place."

He refused to be drawn on what measures would be taken in the October 14th budget, or if it would breach the EU's Growth and Stability Pact by borrowing more than 3 per cent of GDP.

"As far as I'm concerned, the Government has brought the date back to the earliest practicable date for the announcement of the budget. That is in the interest of the economy and of our Government."

He also said that too much focus was being put on the housing market and that the real issues were "first and foremost, the deterioration in the economy and generally in the public finances".

He revealed that he had spoken, not only to the construction sector, but also to economists, the banks, trade unions and farmers and denied a perception that the Government had done nothing over the summer months to act while the economic crisis deepened - especially when the Taoiseach was criticised for playing golf last week.

"I spent the whole of July in my department and I spent half the working days in August there as well. There was not a week in August I was not at my department. I think Ministers are entitled to an annual holiday.

"I took a brief holiday and the Taoiseach was entitled to do that as well," he said.

Mr Lenihan refused to be drawn on the substance of talks he had with the construction industry last weekend about the state of the industry and of the housing market.

However, the Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, said the Government was examining the issue of access to credit for first-time buyers and also for those who are trading up. She is due to meet with the Construction Industry Federation (CIF) next week. The CIF is pressing the Government to use the National Treasury Management Agency to advance money to the banks to get over the credit crunch.

Ms Coughlan said: " . . . we have seen a decline in house prices which is what a lot of young people wanted to hear, but the difficulty is the access to mortgages that were previously available.

"All of that is being considered by the Minister for Finance and the Government. The Minister spent a considerable period of time with the construction industry over the weekend and he will be taking into consideration many of these issues, not just for first-time buyers, but those who are moving on and expanding."

In a separate development, Independent TD Finian McGrath said he would withdraw his support for the Government if commitments made to him following the general election were not honoured. In an interview on Newstalk he said he had had identified "eight priority issues" at a meeting with the Taoiseach in July and, if these were not delivered in full he would have to "totally review the situation".