Government scheme for first-time buyers 'could end up as subsidy for builders'

The head of the Central Bank has criticised the Government's scheme for first-time buyers - saying it could end up serving only as a subsidy for builders.

Governor Philip Lane warned that "if there is an insufficient supply response, raising demand in a given segment of the housing market will just tend to put upwards pressure on prices, with sellers of the properties gaining more than the recipients of the subsidy."

He also said that the scheme runs the risk of helping households that did not need assistance to pull together the deposit for a home.

The comments were made in a letter to Sinn Féin's Pearse Doherty, who says the failure to consult with the bank is a breach of the Programme for Government.

He did praise the Government's post-Budget decision to reduce the minimum deposit condition from 80% to 70%, however.

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