High prices being paid for houses should prompt a rethink of how the State provides support to first-time buyers

IT’S those on higher incomes, developers and auctioneers who appear to be the big winners from the Help to Buy scheme. While the lucrative tax rebate is welcomed by anyone buying their first home, there’s a strong argument to suggest the €68.9m cost to date might be better spent helping those on lower salaries to purchase, rather than those who don’t appear to need help.

While designed to both help first-time buyers and encourage developers to build homes, we know that many remain priced out of the market as prices continue to rise.

But there is an alternative model, rather than relying on the private sector. The Ó Cualann Cohousing Alliance in Ballymun has built homes costing between €140,000 and €219,000, with prices kept low because it received land provided at a hugely discounted rate by Dublin City Council.

It’s suggested the cost to the State for each of those properties was between €20,000 and €30,000 – and the State has lots of land. Sinn Féin’s Eoin Ó Broin makes the point there could be better use of public money – improving affordability, which is an enormous problem for those on average incomes.

Housing expert Dr Lorcan Sirr, from DIT, says if Help to Buy was targeted at helping people secure homes, it should apply to both new and second-hand units. He says it should remain in place for now, but subject to a rigorous review.

Help to Buy was always open to claims it would fuel house prices. It cannot be directly linked to the rapid price inflation we have seen

as the economy recovers, but we know from October’s review that more than 40pc of developers surveyed had increased prices for qualifying homes, albeit saying this was due to higher building costs.

We must also look to the UK, where a Help-to-Buy scheme which offered interest-free loans to aspiring housebuyers has had an unhappy outcome. A number of reports have linked it to higher house prices, and suggested it has primarily benefited those on higher incomes.

While prices are 23pc lower than the 2007 peak, they are rising fast – up 71.6pc from the trough of early 2013 nationally, but 88pc higher in Dublin. It’s no wonder so many are priced out of the market.

The latest CSO figures show the median price of a new home bought by a first time owner occupier is €299,999. In cases highlighted today, the prices paid are 50pc higher. That alone should prompt a rethink of Help to Buy.