No extension of mortgage relief changes, says Noonan

MORTGAGE INTEREST relief measures for house buyers introduced in the last budget will not be extended past the end of this year, Minister for Finance Michael Noonan said.

At a conference on the property industry yesterday, Mr Noonan said prospective purchasers should “factor in the time required between purchase and mortgage draw-down in order to qualify for mortgage interest relief”.

Budget 2012 contained a number of tax relief measures designed to kick-start the property market, including 25 per cent mortgage interest relief for first time buyers and 15 per cent relief for non-first time buyers for house purchases made this year.

“I want to emphasise that this mortgage interest relief measure will come to an end at the end of this year,” Mr Noonan said.

He noted that the 25 per cent measure was designed as a “cushion” to protect first-time buyers from a further 10 per cent fall in the value of their property.

Referring to Tuesday night’s meeting between the chief executives of the State’s banks and the Government’s economic management council, Mr Noonan said only 40 per cent of sanctioned mortgages were being drawn down.

“Mortgage draw-down remains low,” he said, pointing out that this could reflect uncertainty about future house prices, as well as the fact that in Dublin, many house prices were selling at a higher level than the advertised price.

He said the establishment of a national house price register, due in place in the coming months, would help put an end to this divergence between actual and advertised prices.

The Department of Finance was taking “an active role” in helping to ensure the existence of a “normal property market”, he told delegates at the conference, organised by Property Industry Ireland.

Tom Dunne, head of the school of real estate and construction economics at Dublin Institute of Technology told delegates that in the future, Irish people may defer house purchase until later in life.

The emergence of a larger private rental sector was also likely, he said. He pointed out that up to the 1930s, the private rental sector dominated the property market in Ireland, as was the case in other countries.

In 2004, owner-occupiers in Ireland represented 81 per cent of the market, compared to 41 per cent in Germany and 28.4 per cent in Switzerland.