Home Business Help-to-Buy scheme is pushing up house prices, claims ESRI

Help-to-Buy scheme is pushing up house prices, claims ESRI

- Advertisement -

A leading think tank has questioned the decision to boost the Help-to-Buy scheme, saying the move will push up house prices.

It was also argued that the scheme is benefiting large numbers of people who do not need it.

Changes recently announced by Housing Minister Darragh O’Brien mean new buyers can claim up to €30,000 on the incentive. And the Budget extended the scheme to the end of 2021.

But the Economic and Social Research Institute (ESRI) said the incentive disproportionately would benefit those who already had the means to buy a new home.

ESRI economist Barra Roantree said research had shown that 40pc of first-time buyers making a claim under the scheme already had a deposit of at least 20pc before applying.

Under Central Bank rules first-time buyers are required to have only a 10pc deposit before they can be approved for a mortgage.

But Dr Roantree said the scheme would end up benefiting a lot of people who typically had a deposit of more than 10pc already.

The scheme is designed to help first-time buyers fund a deposit for a new home.

Dr Roantree said it would push up demand for housing, at a time when output has fallen back due to the pandemic. The scheme applies only to new homes.

“It is likely to fuel property price growth. So, it will push up prices,” he told an ESRI conference on the impact of Budget 2021.

The latest official figures show that residential property prices fell slightly in July and again in August.

But the ESRI reckons they will now rise due to the changes to the Help-to-Buy scheme.

Finance Minister Paschal Donohoe admitted in August that around 8,000 of the almost 20,000 approved claims to date were made by households that had a loan-to-value ratio of less than 85pc.

This means they already had a deposit of at least 10pc.

The relief was increased last month as part of the July Covid stimulus programme to €30,000, or 10pc of the property value, whichever is the higher.

The ESRI’s comments echo those in a report by the Parliamentary Budget Office last December. It claimed the scheme was priced too generously and “supported a significant number of transactions that would have taken place without the scheme”.

A Department of Housing spokesperson said the extension of the Help-to-Buy scheme is just one of a broad range of steps the Government is taking to improve access to more affordable housing. Budget 2021 provided capital funding of €468m specifically to cover affordability measures.

The Department of Finance denied the scheme has the potential for house price increases.

It said previous work by Indecon Economic Consultants found the main driver of house prices was the mismatch between supply and demand rather than the existence of the scheme. Most of those benefiting from the scheme were on average incomes, it added.

“The aim is to move on from this position as quickly as possible but there is still further progress to be made,” the spokesperson said.

Irish Independent

- Advertisement -
- Advertisement -

Stay Connected

16,985FansLike
2,458FollowersFollow
61,453SubscribersSubscribe

Must Read

‘Hysteria and rushed legislation worse than coronavirus’, campaigners claim

Critics of the Government’s coronavirus policies have formed a new campaign group urging a change of direction Hysteria and ‘rushed laws’ in response to the pandemic are doing more harm than the virus itself, according to a new campaign pushing for the Government to change course. The group, called Recovery, claims the UK’s approach to Covid-19 has prioritised the quantity of life over the quality of life. It argues that the closure of businesses, cancellation of surgical operations and restrictions on liberties are causing more cumulative damage than the virus – citing the impact of the policies on cancer treatment and mental health. Drawing support from medical experts, scientists and business leaders, the organisation urges Boris Johnson to take ‘a more rational, balanced and cautious approach’. Visit our live blog for the latest updates Coronavirus news live ‘It is becoming clear that the consequences of hysteria and rushed legislation can be worse than the virus itself,’ Re..
- Advertisement -

Mikel Arteta sends Manchester United warning to Arsenal players after Dundalk victory

Arsenal put three goals past Dundalk in a comprehensive victory at the Emirates (Picture: Getty) Mikel Arteta felt Arsenal responded well to their defeat...

Four in 10 close contacts of coronavirus patients still not being reached by Test and Trace, latest figures show

In England, just 60.3% of contacts were reached through Test and Trace in the week ending October 21 (Picture: Daniel Leal-Olivas / AFP) Four in 10 close contacts of people who have tested positive for coronavirus in England are not being reached through Test and Trace, the latest figures show. Just 60.3% of contacts were reached through the system in the week ending October 21. This is only slightly up from 59.6% in the previous week, which was the lowest weekly percentage since Test and Trace began. The Government is coming under increasing pressure to sack NHS Test and Trace chief Dido Harding amid concerns among ministers and MPs that the system is failing to stem the spread of coronavirus. Despite this, it was revealed earlier this week that Prime Minister Boris Johnson continues to have ‘full confidence’ in Baroness Harding. Visit our live blog for the latest updates Coronavirus news live It comes as more than 1.5 million people in the West Midlands are set to be plunged int..

Teenage boy, 15, dies after stabbing brawl in London

The scene in Wandsworth this evening (Picture: BPM Media) A teenage boy has died after being stabbed in a brawl in London. The dead youngster is one of two males, both believed to be 15 years old, who were found with knife injuries earlier this evening. Patrol officers had spotted a number of males fighting in Garratt Lane, Wandsworth, south-west London, on Thursday just before 5pm. Both of stab victims were found near the Garratt Lane Burial Ground suffering from knife injuries. London Ambulance Service attended and the teenager was taken to hospital, where he later died. His next of kin have been informed. The second victim is in hospital but his injuries are not thought to be life-threatening. Police at the scene in south west London (Picture: MyLondon/BPM Media) The dead teenager has yet to be formally identified and post-mortem examination has to be arranged. Two males have been arrested and are in police custody. They include a male who suffered a head injury, but did not..

Related News

‘Hysteria and rushed legislation worse than coronavirus’, campaigners claim

Critics of the Government’s coronavirus policies have formed a new campaign group urging a change of direction Hysteria and ‘rushed laws’ in response to the pandemic are doing more harm than the virus itself, according to a new campaign pushing for the Government to change course. The group, called Recovery, claims the UK’s approach to Covid-19 has prioritised the quantity of life over the quality of life. It argues that the closure of businesses, cancellation of surgical operations and restrictions on liberties are causing more cumulative damage than the virus – citing the impact of the policies on cancer treatment and mental health. Drawing support from medical experts, scientists and business leaders, the organisation urges Boris Johnson to take ‘a more rational, balanced and cautious approach’. Visit our live blog for the latest updates Coronavirus news live ‘It is becoming clear that the consequences of hysteria and rushed legislation can be worse than the virus itself,’ Re..

Mikel Arteta sends Manchester United warning to Arsenal players after Dundalk victory

Arsenal put three goals past Dundalk in a comprehensive victory at the Emirates (Picture: Getty) Mikel Arteta felt Arsenal responded well to their defeat...

Four in 10 close contacts of coronavirus patients still not being reached by Test and Trace, latest figures show

In England, just 60.3% of contacts were reached through Test and Trace in the week ending October 21 (Picture: Daniel Leal-Olivas / AFP) Four in 10 close contacts of people who have tested positive for coronavirus in England are not being reached through Test and Trace, the latest figures show. Just 60.3% of contacts were reached through the system in the week ending October 21. This is only slightly up from 59.6% in the previous week, which was the lowest weekly percentage since Test and Trace began. The Government is coming under increasing pressure to sack NHS Test and Trace chief Dido Harding amid concerns among ministers and MPs that the system is failing to stem the spread of coronavirus. Despite this, it was revealed earlier this week that Prime Minister Boris Johnson continues to have ‘full confidence’ in Baroness Harding. Visit our live blog for the latest updates Coronavirus news live It comes as more than 1.5 million people in the West Midlands are set to be plunged int..

Teenage boy, 15, dies after stabbing brawl in London

The scene in Wandsworth this evening (Picture: BPM Media) A teenage boy has died after being stabbed in a brawl in London. The dead youngster is one of two males, both believed to be 15 years old, who were found with knife injuries earlier this evening. Patrol officers had spotted a number of males fighting in Garratt Lane, Wandsworth, south-west London, on Thursday just before 5pm. Both of stab victims were found near the Garratt Lane Burial Ground suffering from knife injuries. London Ambulance Service attended and the teenager was taken to hospital, where he later died. His next of kin have been informed. The second victim is in hospital but his injuries are not thought to be life-threatening. Police at the scene in south west London (Picture: MyLondon/BPM Media) The dead teenager has yet to be formally identified and post-mortem examination has to be arranged. Two males have been arrested and are in police custody. They include a male who suffered a head injury, but did not..

Ian Wright identifies major ‘problem’ for Arsenal ahead of Manchester United clash

Manchester United entertain Arsenal at Old Trafford this weekend (Picture: Getty) Ian Wright believes Mikel Arteta could have a real ‘problem’ on his hands...
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

%d bloggers like this: