Building industry will lobby State to aid first-time buyers
CONSTRUCTION INDUSTRY REACTION:BUILDERS WILL ask the State to aid first-time house buyers by taking a share in their new homes when the industry makes its pre-budget submission.
Construction Industry Federation (CIF) director Tom Parlon yesterday welcomed the news that the Government plans to bring Budget 2009 forward by two months to October 14th, but added that the decision surprised the organisation.
"We didn't specifically lobby for it, we did talk about a mini-budget," he said. "I think we were all urging the Government to give an indication that they do see the urgency in the current situation.
"Some of the figures released yesterday, such as the exchequer returns, were alarming and clearly they do see the urgency, and that's positive."
Mr Parlon said that the new date would allow lobby groups such as the CIF to put their case to Minister for Finance Brian Lenihan.
The federation intends to ask the Government to encourage first-time house buyers into the property market through a joint ownership scheme, under which the State could take equity in new homes for a period of seven to 10 years in return for subsidising the purchasers' deposits.
He explained that in the current climate, banks are only willing to lend 80 per cent of a property's value. This means that anyone wishing to buy a house priced at €300,000 needs €60,000 up front, which many first-time buyers cannot afford.
The CIF is suggesting that the State, through the Department of the Environment's Housing Finance Agency, takes a 10 per cent share in the property when it is bought, cutting the buyer's deposit to €30,000, which Mr Parlon said is affordable. After seven to 10 years, the purchaser can then begin to repay this.
"The big carrot for the Government is that they get €35,000 to €40,000 in VAT when the house is bought," Mr Parlon added.
He pointed out that there were at least 30,000 people in the country who wanted to buy their first home, but barriers like the high deposits required by banks and concerns over the falling price of property were preventing them from getting into the market.
House building in the Republic has been slowing since it reached a peak in 2006. The trends this year indicate that the decline is accelerating and will continue through to 2009.
It is estimated that 30,000 new homes will be built in the Republic next year, one third of the 88,000 completed in 2006.
As a rule of thumb, the construction industry believes that every new home built creates two jobs. On this basis, 116,000 jobs will have been lost over the three years from the end of 2006 to the end of next year.