First-time buyers' grant will drive supply of €300,000 homes - Coveney
First-time buyers should be able to buy homes in the capital for as little as €300,000, Housing Minister Simon Coveney has said.
The minister has insisted the tax rebate scheme for new house hunters to be announced on Budget Day will be a "supply driver".
The Irish Independent understands home buyers will be able to apply for a grant worth 5pc of the value of a new build costing up to €600,000. However, the granted amount will be capped at €20,000.
Mr Coveney said there had been a lot of speculation about the plan because first-time buyers were "effectively locked out of the market".
"If you look at the last 12 months, only 25pc of house purchases were first-time buyers. The figure should be closer to 60pc.
"That is because they have real problems raising a deposit, getting a mortgage, and as a result of that, most importantly, builders are not building houses for first-time buyers because they know they can't buy them at prices they can afford to build them at," said Mr Coveney (pictured inset).
Asked what he considered an affordable price in Dublin, Mr Coveney replied: "It obviously depends where you are. In and around Dublin we need to be supplying houses for people at below €300,000.
"There will be obviously houses that are built and sold for a bit more than that and some for a bit less than that, depending on where they are and what parts of Dublin.
He added: "The most important thing is that houses become affordable again for what should be the majority of purchases, first-time buyers. That is not the case at the moment and therefore there is no supply coming in. Even though there is huge demand from first-time buyers to buy homes there isn't the buying power to follow through on that demand."
Speaking as he launched the social housing element of the Government's Action Plan for Housing, Mr Coveney said he wanted to "reinforce" that what would be announced in the Budget was about helping relieve the pent-up demand.
"It's not an attempt to overheat demand. It is about driving supply and encouraging developers to build new houses specifically for first-time buyers at prices they can afford in parts of the country where they are demanded."
The social housing plan sets a target of 47,000 new units by 2021 as part of a €5.35bn investment.
The scheme will bring vacant and unused houses back into use, starting in Waterford and Carlow over a six-month period.