New tax-cut plea as house prices tumble
Friday June 20 2008
THE SCALE of the property meltdown was revealed yesterday as the latest international indicators show Ireland suffered the third biggest drop in house prices last year - leading to renewed calls for tax breaks and stamp duty cuts.
Between the start of 2007 and the beginning of 2008, Irish house prices dropped an average of 13.2pc.
Only Latvia, with a huge slump of 38.2pc, and the US, with an 18pc drop, performed worse.
In comparison, Slovakia recorded a 29pc increase in real terms, followed by Shanghai (28pc) and Hong Kong (26pc).
However, most of the areas measured in the Global Property Guide survey also experienced a drop -- with only 13 countries seeing price rises compared with 21 where prices fell, when adjusted for inflation.
The Construction Industry Federation (CIF) said it was seeking tax relief for first-time buyers to revitalise the market and CIF head Tom Parlon called on the government to temporarily suspend stamp duty.
Mr Parlon claimed that CIF officials were at a "very advanced stage" in discussions with the Department of Finance about a first time buyer's tax break.
"It is in the interest of the revenue to do so," he said.
"There is €1 bn of VAT available in unsold houses that would be freed up if the houses were sold.
"If you look at the previous years, our prices rose as one of the fastest but there has been a massive falloff and we'd ask the government to provide incentives in the short term."
The credit crunch and high inflation is being blamed for the drop in prices worldwide.
But the particularly sharp fall in Irish prices also led to calls for the introduction of 1980s-style community welfare payments to assist people who might suffer from negative equity as a result of the plummeting house prices.
And Labour's housing spokesperson, Ciaran Lynch, said that banks who had engaged in reckless lending had to bear "direct responsibility" for the effect that plummeting prices could have on young homeowners.
"Twelve months ago, the banks were ringing people up offering people money and now we're at a situation where they won't answer the phone," Mr Lynch said.
"Community welfare service can issue discretionary payments for hard-pressed families in danger of losing their house."
