Noonan told to extend tax relief on mortgages
Coalition colleagues urge action to sustain property market revival
Finance Minister Michael Noonan is facing mounting calls within the Coalition to extend the mortgage interest relief deadline for homebuyers beyond the end of the year following a significant surge in the property market in recent weeks.
Since the summer, a noticeable upsurge in demand for homes, particularly in Dublin and surrounding areas, has been attributed to the ending of the interest relief --but given that the market has languished since the crash in 2007, many within Government now feel the deadline should be extended.
The incentive means first-time homebuyers receive mortgage interest relief at 25 per cent and non first-home buyers receive relief at 15 per cent.
Currently, mortgage interest relief runs for seven years.
Property experts are united in their belief that the revival of the property market is being at least partially driven by the desire of purchasers to take advantage of the mortgage interest relief available until December -- which could be worth up to €27,500 to a couple buying their first home.
Yesterday, Social Protection Minister Joan Burton appeared to support the case for extending the deadline, saying the matter would be discussed by the Cabinet before the Budget.
"This is one of the factors that will be up for discussion in the context of the Budget. Yeah, I think there is a well-known Irish thing to go for the mortgage relief as the period expires.
"That is primarily a discussion for Michael Noonan -- and he will bring that discussion to the Cabinet and we'll discuss it around the table," she said.
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Asked will it be discussed, Ms Burton said: "Oh, I think everything will be discussed and I think that is one of the items that will be discussed.
"I think it has given quite a positive lift that clearly, at this stage, hopefully, the fall in the property market seems to be bottoming out just as the fall in unemployment appears to have stabilised.
"So both of those are good indicators -- but what we need now is to move the graph upwards," Ms Burton added.
At last week's Fine Gael parliamentary party meeting, Mr Noonan was called on by a number of backbench TDs to consider extending the deadline and continue the relief into next year.
Yesterday, Wicklow TD Simon Harris said if it was possible, the deadline should be extended.
"We have to see the full benefit, and if it is possible it would be desirable to extend the deadline for a number of months. But it has to be targeted," he said.
His party chairman Charlie Flanagan concurred, saying the market remained flat and it would be beneficial to consider the issue.
"We need to be mindful of a gross distortion to the market, but notwithstanding that, I believe to stimulate a very under-performing market the Government should consider the issue," he said.
Labour's chairman of the Oireachtas Finance Committee, Ciaran Lynch, said that he felt house prices were returning to normal levels and he supported the calls for looking at measures aiding that normalisation.
"Examination should be given to what assistance can be given to help normalise the market, but the one thing we don't want is to have a situation where tax reliefs distort or inflate prices.
"Absolutely do it with a view to normalisation but we don't want another bubble," Mr Lynch said yesterday.
A recent survey by the property website Myhome.ie showed that 88 per cent of Irish people hoping to buy in the next 12 months believe that the deadline should be extended.
Last month there was a rise of 2.4 per cent in house and apartment prices in Dublin -- the biggest upwards move since August 2006.
Values across the country as a whole were up 0.9 per cent in September, following increases in August and July, according to the official Central Statistics Office (CSO) figures.
That's the biggest national price rise since the property market started its five-year long descent at the start of 2007. House and apartment prices have halved since the 2007 peak.
The average price of a house or apartment is now close to €160,000, calculations based on the CSO data show. In Dublin, the average price for a property is now €188,000. Outside Dublin it is €144,000.
Nama CEO Brendan McDonagh said there were emerging signs that the Dublin residential market was close to bottoming out.
"However, it would not be a surprise if price indices gave mixed signals for the near future at least," he said.