Sunday 22 October 2017

No proof Help-to-Buy fuels prices - report

Stock picture
Stock picture
Paul Melia

Paul Melia

There is no evidence that the controversial Help-to-Buy scheme for first-time buyers is leading to an increase in house prices or new supply, a report commissioned by the Government says - but it will be "vital" that prices are carefully monitored.

A report by consultants Indecon also suggests some borrowers are availing of the relief, despite not needing support to help them afford a home.

The scheme gives first-time buyers of new homes or self-builds a tax break worth up to €20,000.

There was no mention of the Help-to-Buy scheme in Finance Minister Paschal Donohoe's Budget speech, despite suggestions that changes would be made.

The report says there were almost 3,000 applications under the scheme in the first eight months of this year, totalling almost €43m, and that numbers are dropping.

"The HTB measure does not appear to have had any significant overall impact to date on the level of supply," it said.

But it also cautions that "an abolishment of the scheme at this time would create uncertainty and damage confidence and would likely impact on the levels of new builds".

"There is, however, likely to be some purchasers who did not need the incentive, suggesting an element of deadweight, and particular affordability issues remain for those on lower incomes.

"Targeting the incentive to provide greater support to assist individuals or couples with average incomes to fund deposits may be appropriate," it said.

The report also said that "no significant increases" in completions were found in 2017, but that it provided an incentive for builders to provide additional homes.

Irish Independent

Also in Business