'Pitching first time buyers against each other not the answer' - Lucinda Creighton
Reform Alliance TD Lucinda Creighton says the Government's proposed first-time buyers' scheme will pitch first-time buyers against each other and fuel demand.
Speaking on RTE's Morning Ireland programme, Ms Creighton said: "I’m very firmly of the view that there is an issue with supply of housing across the country, particularly in Dublin.
"But creating further demand and fuelling demand and essentially pitching first time buyers against each other is not the way to deal with that issue."
Her comments come as leading economists warn the Government's proposed first-time buyers scheme could lead to another property bubble.
The increased level of mortgage funding is expected to provide certainty to the construction industry, which it is hoped will encourage more house building and tackle the housing shortage.
However, property economist Ronan Lyons said the plan to generate greater demand by increasing credit would not tackle the low supply.
"If they want to get more supply, and it seems they do, they should be tackling the supply issue directly, not trying to bring about more demand so that hopefully supply comes on."
He said pursuing such a policy had led to the negative equity crisis.
However, the new plans were welcomed by the Construction Industry Federation, which said house building needed to increase from 8,000 units a year to 25,000 a year.
"Any initiative that promotes the construction of housing is to be welcomed," a spokesperson said.
Meanwhile, the Government is planning to revive the requirement for developers to controversially give a certain number of new homes in private estates over to social housing.
Taoiseach Enda Kenny will launch a plan today aimed at kick-starting the building of family homes to create 60,000 jobs in the construction sector.
The plan will include the examination of a proposal to make it easier for first-time buyers of new houses to get a mortgage through a state guarantee on part of the loan, as revealed in yesterday's Irish Independent.
But a plan to tax sites and land that are zoned for development and not built upon is still in the pipeline but will require more work.
The details of the vacant-site tax still have to be worked out, but will be aimed at sites in city-centre locations to ensure a continual flow of new housing in developed urban areas.
The vacant-site tax would not apply to large, greenfield sites on the outskirts of cities.
Fine Gael and the Labour Party have failed to agree upon a dilution of the so-called Part 5 requirement to provide social housing.
Part 5 of the Planning Development Acts 2000-2002 allows a developer to have to set aside up to 20pc of new developments of five or more houses for social or affordable housing.
The measure was intended to ensure a mix of social classes in new estates.
But developers have also been able to buy their way out of the rule through a financial contribution of similar value or by transferring land or houses elsewhere to the council.
In earlier drafts of the construction plan, the Government appeared set to either abolish or reduce the obligation to 10pc.
But now the momentum is swinging in the opposite direction with the Coalition planning a clampdown on the get-out clauses.
Fine Gael regards it as a hindrance to development, while Labour sees it as desirable to deliver a social mix.
"Our view is Part 5 is staying. It's here to stay. It needs to work. There are too many get-out clauses and it needs to deliver units," a government source said.