Responding to yesterday's CSO Residential Property Price Index for May, Brokers Ireland says while the continuing easing in house price inflation is welcome, particularly in urban areas, where affordability has been stretched to its limits, there are still intractable problems in the market preventing aspiring buyers from being able to acquire homes and doing so at reasonable prices.
Diarmuid Kelly, Chief Executive at the organisation which represents 1,250 Broker firms, called for the Help-to-Buy scheme to be extended beyond the end of this year saying there is a “compelling logic” for its retention.
He says Banking and Payments Federation Ireland figures for the first quarter of the year show there were just 6,673 purchase mortgage drawdowns, of which only 4,061 were first-time buyers when re-mortgage/switching and top-up mortgages were excluded. “And as today’s CSO figures show there is a low level of new dwellings being transacted, just 18.7% of all transactions.”
He says not enough is being done to “stimulate or incentivise the building of affordable homes, while we bow to the international trend whereby housing increasingly has become financialised, transformed by global capital markets. It doesn’t have to be so one-sided."
While the Help-to-Buy scheme is but one aspect of the housing market, it is, nonetheless, providing important access to home ownership, with almost 30,000 applications up to June, he said.
Mr Kelly said:“The scheme is enabling first-time buyers acquire a home in a very difficult market where rental levels exceed mortgage repayments, dramatically so in many areas.Home buyers pay up to one third of the price of a new home in a series of taxes and levies, including VAT which does not apply across the border in Northern Ireland or in the UK."
He said:“If you qualify for a mortgage you will pay interest rates for the lifetime of that mortgage on these upfront State taxes. In this context the 5pc Help-to-Buy tax rebate, up to a maximum of €20,000, is a minor concession. It is hugely helpful in a very difficult market."
Mr Kelly says his organisation believes the Help-to-Buy scheme should be extended to include those buying second hand homes.
He said:“Those who are not in the new homes market are, through their taxes, helping those buying or building new homes, in some cases quite expensive homes, while they themselves are unable to move from homes they have either outgrown or, worse, are stuck in paying rents at historically high levels. There is an inequity there."
And he says studies invariably have found that home ownership is critical to the growth of personal wealth over the longer term.
The Help-to-Buy scheme gives first-time buyers a 5pc income tax rebate up to a maximum of €20,000, on the purchase on a new home valued at up to €500,000. Self-build properties are also eligible.