Saturday 24 February 2018

Celtic Tiger housing bubble won't happen again, Simon Coveney claims as he vows to help first-time buyers

Housing Minister Simon Coveney. Photo: Tom Burke
Housing Minister Simon Coveney. Photo: Tom Burke

Kathy Armstrong

The Government won't allow another Celtic Tiger boom-to-bust situation happen, Housing Minister Simon Coveney has said.

Two new reports from Daft.ie and MyHome.ie highlighted rising costs of houses, with the latter saying annual house price inflation is 9 per cent nationally and 10.2pc in Dublin, where the average home will cost you €347,000.

The reports blamed rising property prices on the new State tax incentive scheme and a change in the Central Bank's mortgage lending rules but Minister Coveney said these measures are actually helping first-time buyers get on the property ladder.

When asked if we're heading for another property bubble, he said: "We’re not going to allow a situation that happened during the Celtic Tiger, so-called Celtic Tiger period, where many first-time buyers were allowed to borrow ridiculous amounts of money.

"Instead we are helping people to get a deposit together to buy homes and as a result of that we are seeing a lot of new starter homes being built at the moment, which was not happening this time last year."

The Fine Gael TD claimed a major issue is a lack of housing supply, which he says is something the Government are focused on tackling.

The good news is that the property market is recovering - the bad news is that many of those seeking their own home for the first time still appear locked out of the market. Photo: Stock
The good news is that the property market is recovering - the bad news is that many of those seeking their own home for the first time still appear locked out of the market. Photo: Stock

Speaking on Morning Ireland on RTE Radio One, he said: "Last week, we announced €226 million of targeted infrastructure funding to open up large housing sites that will deliver 23,000 houses in the next three to four years. But…it would be wrong of me to say that there aren’t real pressures on the system - of course there are. And we’re not going to fix the housing pressures overnight.

“Many people who would like to buy homes can’t because there aren’t enough for sale and that’s driving prices up. But also we are seeing strong economic recovery and so more people are now wanting to buy.

“There’s a lot of pent-up demand because people haven’t been buying houses for the last seven or eight years and undoubtedly that is pushing up prices. The only way we can respond to that is to facilitate and support significant increases in supply, whether that’s getting vacant properties back into use or whether it is new build and that is happening at the moment.”

He added: "Planning permissions are up 26pc, commencements are up 44pc, completions are up nearly 20pc. But we are starting from a base that’s far too low and that’s the problem.”

Minister Coveney said that in the last three months of 2016 just 297 out of over 3000 houses purchased by first-time buyers were new homes.

He said that the help-to-buy scheme will hopefully encourage people to build starter homes again and make property more accessible for first-time buyers.

He said: “If anybody suggests to me that as a way of keeping house prices down we should continue to lock first-time buyers out of the house-buying market, which was the case, then I can’t support that."

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