Help-to-buy scheme leads to 50% rise in first-time buyers

The Government’s move to offer €20,000 tax rebates to help first-time homebuyers purchase properties has led to a 50 per cent increase in the number of such buyers getting on the property ladder.

The number of deals in this category grew to more than 3,000 in the 12 months to last November, up from 2,000 in the previous year, according to Central Statistics Office figures.

However, the number of first-time buyers in the market during a period when house price inflation was running at 11.6 per cent a year remained small, given that 60,120 houses were sold throughout the State.

The help-to-buy scheme was introduced in January 2017 to aid first-time buyers struggling to meet tougher Central Bank deposit rules.

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The new figures came as it emerged that Fianna Fáil will shortly unveil a general election manifesto pledge to establish a new State agency to drive the construction of 90,000 homes over three years.

Goodbody economist Dermot O’Leary said help-to-buy had played a role in boosting demand, particularly for houses priced between €226,000 and €300,000. He acknowledged that first-time buyers of new homes were still a minority,

He rejected suggestions that the incentive was helping to inflate the housing market, suggesting prices were being driven by a stronger economy and immigration.

Mortgage-lending rules

However, Mr O’Leary said a recent tightening of the Central Bank’s mortgage-lending rules, limiting the amount of money banks could advance outside of strict loan-to-income caps, may dampen activity in the coming year.

The 60,120 houses sold in the year to last November remains small compared with the numbers recorded before the 2008 economic crash, but the 5,873 houses sold in November is the highest monthly figure recorded since January 2010.

Nationally, Dublin has seen the highest growth in new-home sales, jumping by 92 per cent. Meanwhile, two-thirds of all new homes sold in the country in the year were sold in the greater Dublin area, including Kildare, Meath and Wicklow.

House prices nationally have risen by nearly 72 per cent since 2013, when they reached their lowest point since the crash. They are now just 23 per cent off their 2007 peak. In Dublin, prices have increased by 88 per cent since the property market’s nadir, now standing 24 per cent off their highest levels.

The greatest house-price growth in Dublin was in south Dublin, at 13.3 per cent, and while the lowest growth was in Dún Laoghaire-Rathdown, house prices still advanced there by a substantial 10.8 per cent.

The West region showed the greatest price growth, with house prices increasing 16 per cent annually, while the Mid-West region showed the least price growth, with house prices increasing 8.9 per cent.

Davy analyst Conall Mac Coille said the 1.1 per cent price growth recorded last November was “sharp”, suggesting there was still no sign of the usual seasonal slowdown during the winter.

He also noted that house-price inflation was now in double-digit territory across all regions except the Mid-West.

Meanwhile, Fianna Fáil’s proposed new housing authority would use public and private money to drive the construction of 90,000 new homes in its first three years, starting off with rapid-build homes for those currently homeless.

It proposes that the new authority would use €3 billion worth of National Asset Management Agency profits for housing, while the total debt raised will be kept off the State's borrowing figures, according to the plan being drafted by Fianna Fáil housing spokesman Barry Cowen.