New house prices up by 16%

New house prices rose on average by 16 per cent in 1997 and second-hand house prices increased by an average of 19 per cent, according to Department of Environment figures. The wholesale cost of building and construction materials was up by 1.6 per cent.

The price of new houses rose on average by 12.7 per cent in 1990, falling to 2.1 per cent the following year. Second-hand house prices increased by an average of 14.3 per cent in 1990 and dropped to just 2.8 per cent in 1991.

Prices had risen steadily almost every year since in both categories, according to the figures.

In a written reply, the Minister for the Environment, Mr Dempsey, said the Government's Action Plan on House Prices included a series of measures to assist first-time buyers.

These included an increase in the income limit for the local authority shared ownership scheme to £20,000 for single income households, with a corresponding rise for joint income households.

First-time buyers would also be helped by the removal of fiscal incentives to investors who were pricing low income buyers out of the market and by the reductions in stamp duty rates, particularly at the lower house price levels. The Bacon Report did not recommend any change in relation to the £3,000 new house grant for first-time buyers. "The main thrust of their recommendations is towards removal of distortions in the market and, in present market circumstances, any increase in the new house grant would be likely to be absorbed in higher prices," he added "It is not possible to quantify the precise number of prospective first-time buyers in any particular income category. I am confident that the measures now being taken will assist a significant number of lower income households in getting access to home ownership."

Measures to boost housing supply would also aid first-time buyers and dampen price increase by improving the balance between supply and demand, he said.

These included increased densities at appropriate locations and a temporary reduction for the next four years to 20 per cent of capital gains tax on disposal of serviced land zoned residential to encourage faster land release for residential development.