Darragh O'Brien denies shared equity scheme will push up house prices as happened in Britain
Housing Minister Darragh O'Brien said the scheme here, which is aimed at first-time buyers buying a new-build home on private land and will provide up to 20% equity support from the State, is not the same as its UK counterpart.
The Housing Minister has said his shared equity home loan will not push up house prices, despite a report in Britain finding a similar scheme had.
A report by the House of Lords into the British Help-to-Buy scheme, which enables first-time buyers to obtain an equity loan from the Government of up to 20% (or up to 40% in London) of the market value of new-build homes, found it will have cost £29bn (€34bn) by the end of next year and would have been better spent on new housing supply.
"We find that the Government’s Help to Buy scheme, which will have cost around £29bn in cash terms by 2023, inflates prices by more than its subsidy value in areas where it is needed the most. This funding would be better spent on increasing housing supply," the report says.
The Lords report quotes Christian Hilber, professor of economic geography at the London School of Economics and Political Science, as highlighting analysis which shows schemes like Help To Buy have increased supply, but mostly in places where it is easier to add new homes.
"Demand-side housing policies (such as the Help to Buy Equity Loan scheme) may increase housing construction, but only in locations where it is comparably easy to add new housing supply such as near the English/Welsh border”.
He added that in areas where jobs are located and housing is severely supply constrained such as in Greater London, the scheme had “led to a substantive increase in house prices, with no statistically significant effect on construction numbers".
However, Housing Minister Darragh O'Brien told the that the scheme here, which is aimed at first-time buyers buying a new-build home on private land and will provide up to 20% equity support from the State, is not the same as its UK counterpart.
"The First Home Shared Equity scheme is a key initiative being introduced under the ‘Housing for All’ Plan. It will involve the State and participating banks supporting hard-pressed first-time buyers to purchase homes in private developments. The scheme is being designed to stimulate an increase in supply by improving confidence as to the viability of future housing developments to meet increased demand.
"The First Home Shared Equity Scheme is similar to but not the same as the UK Help-to-Buy scheme. The scheme has been carefully calibrated to address any inflationary risks. It will be a targeted, short-term measure, with evidence-based price caps in place. Unlike in the UK, an applicant must satisfy a need for access to the scheme.
"Ultimately, the scheme will help to activate some of the 80,000 un-activated planning permissions in Ireland."
Mr O'Brien's scheme will commence this year and is envisaged to be in place until 2025.
