Help-to-Buy’s real benefit has been in helping to build

HELP-TO-BUY, modern Ireland’s firsttime buyers’ grant, has always been a double-edged blade. Based on a measure introduced to enable buyers to get on the first property step in Britain, it has undoubtedly been inflationary to some degree – in Britain it was calculated the incentives there ultimately raised prices by as much as 7pc.

Economic history tells us any measure that increases the spending power of many buyers at once, in the absence of a suitable supply increase, ultimately leads to inflation.

Some new-home schemes in cities would doubtless have been somewhat cheaper were it not for the in-built €20,000 discount, enabling some developers to add to the end sale price.

Most of that inflationary surge likely took place soon after the incentives came into effect in 2017 and even into this year. The marketdistorting effects of Help-toBuy were among the reasons Housing Minister Eoghan Murphy was reported to have been keen to ditch the tax breaks when he first took up his portfolio.

What many don’t realise is that Help-to-Buy has also proved deflationary for the owners of second-hand homes in the vicinity of new schemes. Those who are selling second-hand homes nearby have had to cut their prices to compete with the increased number of new properties springing up with their relative discount. A good example is Dublin 15, where second-hand prices have not moved with those in other parts of the city.

The beneficiaries – Irish first-time buyers – are a very different lot today than back when the last first-time buyers’ grant was available. In the late 1990s they were likely to be in their twenties and struggling on starting salaries. Today, they are in their mid-thirties and likely earning substantially more.

They are also likely not to have children going through college, nor suffer from negative equity, as is the case with many other buyers who don’t qualify for the €20,000 break. There’s also the cost to every other non-beneficiary taxpayer who has to stump up (estimated at €72m for its first three months) for the lost revenues.

But where Help-to-Buy has been hugely beneficial has been in kick-starting home construction. When it was introduced in early 2017, increased building standards, lack of affordable bank credit for developers and increasing land costs meant many new-home schemes in peripheral parts of Dublin and outside the capital were struggling for commercial viability.

Help-to-Buy pushed many frozen greenfield sites into activity and got schemes moving. Scheme homes are up above 50pc in 2018.

The real benefit of Helpto-Buy? More like Help-toBuild.