Cheaper mortgages will be provided for thousands of lower and modest income earners who cannot afford to buy their own houses, under a new scheme agreed by the Government.
Yesterday the Cabinet approved the scheme to provide house-purchasing power to people earning less than £20,000 a year, or less than £50,000 in the case of double-income households.
In order to avoid a distortion in the market, the additional new houses will be "ring-fenced", to be built by local authorities on land also provided by them and then sold at cost price.
It is estimated that 400 houses will be provided under the project this year, but this figure is scheduled to increase to 2,000 within two years.
Introducing "the new affordable housing scheme" at the Department of the Environment yesterday, the Minister with responsibility for housing, Mr Robert Molloy, said the houses would be sold at a discount from market value.
The Housing Finance Agency would provide mortgage finance to allow local authorities throughout the State to provide advance loans under the scheme at a variable rate of 4 per cent, or a fixed rate of 4.4 per cent for five years.
The local authorities are to determine who should qualify under the scheme on grounds of income, or by tenants surrendering local authority or voluntary accommodation.
Describing the scheme as an effort to "bridge the affordability gap" that had emerged in the face of rising house prices, Mr Molloy said the extra provision of a graduated subsidy to assist buyers with their repayments would further reduce mortgage out-goings in households with an income of not more than £16,000 a year.
This would ensure that buyers below this limit would not be paying more than one-third of their income on mortgage repayments.
The graduated subsidy would provide an annual boost of £1,600 to buyers on an income of £10,000 and less, reducing to £1,000 a year for those earning between £14,000 and £16,000.
"The favourable mortgage rates will be available solely in respect of additional new houses provided under the scheme.
"There is no scope at present for any measures or interventions that would fuel demand and so lead to further price increases," Mr Molloy said.
According to the Minister, each local authority has "a fair idea" of the land at its disposal.
Dublin and Galway Corporations had already presented figures for the lands they had, he added.
"This scheme is an option, not a solution. We do not know how many people will be involved.
"It is exclusively for people who have incomes of the levels mentioned and who local authorities believe can take on the mortgages," he said.
The latest annual figures for house-building, covering 1989, show that a new level of 42,349 units was reached.
This was the fourth consecutive year for record building.