Housing experts have expressed concern that plans for a help-to-buy scheme for first-time buyers could simply end up driving the price of housing upwards.
Economist Ronan Lyons said first-time buyers may end up being given more credit to bid against each other for a limited number of homes.
“If you want housing to be affordable, increase supply – it’s no more complicated than that. If supply is not forthcoming we need to understand why, rather than push the price of housing further up.”
Economist Colm McGrath also voiced concerns, stating that a help-to-buy scheme was in danger of “revisiting the errors of the past” as it did little to address a shortage of housing.
He said moves to establish a State-backed mortgage insurance scheme for first-time buyers sounded reminiscent of 100 per cent mortgages in that it would allow people to buy homes with relatively little up-front finance.
Opposition parties were also sceptical of plans which they described as “pre-election gimmicks” which did not tackle the real problems faced by those hoping to buy a home.
Balance sheets
Fianna Fáil finance spokesman Michael McGrath said: "I am led to the conclusion that the real agenda is to drive up house prices, which will again have the effect of putting home ownership out of reach for many would-be first-time buyers, and to shore up the balance sheets of banks."
Sinn Féin leader Gerry Adams said the plan read like "an extract from the election stunt section of the Fianna Fáil handbook of strokes and other scams".
“It doesn’t make any sense at all in dealing with the crisis.”
Construction and property industry groups were more welcoming of Government plans to kick-start the industry, but many voiced disappointment at the lack of immediate measures to increase housing supply.
Property Industry Ireland, which represents businesses working in the Irish property and construction sector, said it had hoped the plans would include more short-term measures to kick-start the housing supply.
"We hope that over the next few months we can work with Government to explore more specific short-term targeted initiatives to implement this housing construction strategy and to get builders back constructing the housing stock which is now very badly needed," said the group's director Dr Peter Stafford.
Housing supply
Commercial property consultants CBRE Ireland warned that not all of the measures would alleviate the shortage of housing supply.
"We have huge reservations about the proposed site value tax which could very well have the opposite effect of the one intended," said Marie Hunt, CBRE's head of research.
“We are also concerned about plans to boost access to mortgage funding for first-time buyers which will boost demand as opposed to supply”.
These concerns were echoed by the Society of Chartered Surveyors Ireland. "The lack of direct measures to improve the supply of housing, particularly in Dublin where price inflation is increasing at worrying levels, is a shortcoming of the strategy," said Andrew Nugent, the society's vice-president.
The Construction Industry Federation said the strategy has the potential to provide a boost to construction and create thousands of new jobs.
Chambers Ireland said the plan recognised the relationship between strategic growth in construction and a sustainable economic recovery.
