Latest house price rise may signal end of Help-to-Buy scheme
THE Help-to-Buy scheme may be on the way out over fears it is driving inflation in an already volatile housing market that is short on supply. Latest figures for the first half of 2017 suggest house prices continue to spiral by an average of €19,000 a year which experts say is cancelling out any gains deriving from the Help-to-Buy. In Kerry, house prices are 4.3% higher on the same period last year (January to June), while the Property Price Register shows the average house price in Kerry is now €150,758.
The Help-to-Buy scheme was introduced in January by Simon Coveney as a means of encouraging first-time buyers to make the leap into property ownership.
It offers a maximum rebate of 5 percent of the value of a purchase price, up to a limit of €20,000, with a cut off in properties valued at €500,000. The introduction of the scheme coincided with a relaxing of mortgage restrictions by the Central Bank - coupled with greater deposit savings from buyers coming on stream – which, experts say, has helped create an environment for inflated prices.
However, latest indications suggest the scheme, which was due to run until 2019, is on the verge of collapse with newly appointed Minister for Housing, Eoghan Murphy describing it as ‘failing to address the wider problem of housing supply’ within the sector for first-time buyers in particular.
Upwards of 7,000 first-time buyers have so far applied for the tax rebate with an estimated 40 percent of these applications in the Dublin area. The Department of Finance have also indicated that the numbers of people availing of the scheme is low. However, some market commentators say the Help-to-Buy has helped spark demand in what was a stagnant market prior to its introduction.
Lorcan Sirr, a lecturer at Dublin Institute of Technology, estimated there are on average 20 applicants for every new home which is creating a bidding war among first-time buyers which is causing an ‘inflationary dilemma’ in the purchase of new homes.