Speaking on RTÉ, Mr Murphy said he was worried that the first-time buyers’ grant “hasn’t achieved the delivery on the [housing] supply side that we need”.
A review is under way to see if the scheme is pushing up house prices, he said, adding that he will make a decision on it when the review is completed.
When a government minister openly expresses reservations about a scheme like this, it usually means it is in line to be scrapped.
The minister has clearly been influenced by calls from various quarters to end the scheme, on the grounds that all it is doing is pushing up the price of homes. That is the view of Davy chief economist, Conall MacCoille, among others.
The measure, introduced last October by former finance minister Michael Noonan, allows purchasers to claim a rebate of income tax already paid, up to a maximum of €20,000.
The scheme is far from perfect, with a very narrow focus. In the first place, it was designed to help first-time buyers meet tougher deposit requirements under Central Bank mortgage lending rules, but those rules have since been eased.
Secondly, it is cumbersome to operate, as purchasers must claim a rebate from the Revenue Commissioners on income tax or Dirt tax on bank savings paid over the four years prior to the year they are buying, or building, their first home.
Thirdly, the maximum assistance amounts to 5% of the purchase price. That, of course, may make all the difference to a young family or single person seeking to buy their first home, but, in many instances, it may not be enough.
In Scotland, a help-to-buy scheme introduced three years ago has been a huge success. New-home buyers there are directly aided to the tune of 15% of the purchase price, so all they need to fund is 85%. While they are granted full title to the home, the Scottish government retains a security for the remainder. The scheme was so successful in galvanising the Scottish construction sector that it was expanded to include shared ownership and shared equity.
Limited though it is, Ireland’s help-to-buy scheme has been demonised and blamed for soaring house prices here. But the figures don’t stand up. The scheme is restricted to first-time buyers and newly built homes and, according to the property website, Daft.ie, 90% of all home sales are secondhand.
The Construction Industry Federation points out that the scheme has created a viable market for first-time buyers, with the result that banks are lending again. They say any attempt to end it will do nothing but compound the housing crisis. They may be right, but if the CIF wants to prevent that happening it must do more to ensure that its members are
delivering the number of homes this country needs.