“The Government are trying in different ways to incentivise first-time buyers to buy new homes,” says Elizabeth Hegarty, Associate Director of Savills Cork Residential. “There has been an increase in house prices and the Government are trying to make new homes as affordable as possible at the moment.”
The Government’s “Housing for All” plan is a grand nine-year roadmap which will see the imbalances of the housing market put right again. Within that framework, one of the forthcoming elements is the “First Home” Affordable Purchase Shared Equity Scheme. This much-anticipated development is due to make an appearance early this year. Final plans haven’t yet been unveiled but the idea is that the ever-widening gap between what first-time buyers can afford and the price of a house will be bridged by the State stepping up with cheap equity.
The scheme is being jointly supported by the Government and by participating retail banks. The support will take the form of a percentage equity stake in the property, which will be sold off to the purchaser over time and at a time of their choosing (or when the house is sold). It is anticipated that a stake of up to 30% of the price of the house will be offered to qualifying buyers (or 20% if they are availing of the Help-to-Buy Scheme).
It isn’t a new idea and many people bought their homes through a similar scheme operated by County Councils in the past. It is, rather, a case of the State stepping in again to help people buy their own homes in a manner that was taken as normal practice a couple of decades ago.
“I think the Shared Equity Scheme will make a difference,” says Elizabeth Hegarty, Associate Director of Savills Cork Residential. “To be honest, I think that people need to get their heads around it – as do we – as to how it’s going to be rolled out and how it’s going to be delivered and when it’s going to be delivered.”
Some commentators believe that although this scheme is well-meaning and that it will be of great benefit to the market in general and to first-time buyers in particular, the uptake will be limited somewhat by buyers’ desires to simply buy their own home outright as quickly as possible – without any recourse to a leg-up from Government.
“The problem with the First Home shared equity scheme is that we don’t really know what it is yet,” says Pat Davitt, CEO of IPAV. “We expected that it might have come onstream last year so we’ll have to wait and see. The Minister keeps mentioning it and they seem to be determined for it to happen, so we should know soon enough.
“It will be a help in the marketplace for young people to buy houses but if the Central Bank changed their rules from 3.5 times the salary (to qualify for a mortgage) to 4.5 times the salary, it would be a much better move in my opinion. That way, you get to buy the whole house – not 70% or 80% of it.”
According to Paul Hannon, Director of Sherry Fitzgerald New Homes in Cork, the shared equity idea is to be welcomed as any measure that will help the situation will be, but the overall thrust of the Housing for All plan is missing certain vital elements, such as the ability to tackle the supply side of the equation. Neither, he says, does it tackle the high cost of construction.
“This year, we’re at a stage where we had 21,000 houses built in 2021,” says Pat Davitt, Head of the Institute of Professional Auctioneers and Valuers. “The Government is hoping that that will push up as far as 30,000 this year but I think that if they manage to push it up as far as 25,000 or 26,000, that will be the height of it.
“There are a good number of planning permissions granted out there but to get them up and running is another thing and to get the staff to do that is another problem again.”
Much of the target number will be taken up with social and affordable housing in any case, Davitt points out, and that’s something that will help but like many, he sees the real problem as one of ensuring supply from and to the private market.
“Having said that, any housing stock that comes on the market is very helpful,” says Pat Davitt.