Beware of meddling in the property market

HE says it’s an ideas paper, not a policy manifesto.

However, Leo Varadkar’s “ideas” will have a direct effect on the running of the country when he becomes Taoiseach, as now seems extremely likely. Before he even takes up office, the Fine Gael leadership frontrunner is already in danger of having an impact on active areas of public policy.

When he expresses his “ideas” on the property market, for example, it will have an effect on house prices.

Mr Varadkar pledged to abolish the Help to Buy scheme for first-time buyers if it proves to be inflating house prices.

The Help to Buy scheme was introduced in Budget 2017 and allows for a tax refund of up to €20,000 for first-time buyers seeking to purchase a new home.

The Social Protection Minister and putative taoiseach takes the view that if the scheme isn’t working, then it should be done away with. The problem is the scheme won’t be stopped immediately. At the earliest, it will end in July or maybe a decision will be kicked on to Budget 2018 in October, or to the end of the year. In the meantime, homebuyers will be left to wonder if the scheme will be staying or going.

Estate agents claim prices could further rise in the short-term as first-time buyers scramble to buy properties amid fears the grant will be abolished. There are also concerns builders could postpone developing new homes until there is certainty over its future.

Unfortunately, we have seen the damage of meddling in the market for political purposes before, most notably by the PDs a decade ago.

The lesson is if a government doesn’t know what it is going to do, then ministers shouldn’t start speculating.