GE2024 FactCheckTHE FIRST TELEVISED debate of this year’s general election campaign has taken place.
Last night, RTÉ’s Upfront with Katie Hannon programme hosted candidates from six parties, each of whom pitched how they would deal with the housing and homelessness crises if elected.
There were testy exchanges between Government and opposition candidates, with much of the focus on two schemes designed to help first-time buyers and the Government’s delivery of housing.
The big claim of the night, which cropped up repeatedly throughout the debate, centred on a suggestion that the Government’s Help To Buy and First Home shared equity schemes are responsible for an increase in house prices.
The first of these, the Help to Buy scheme, was introduced in 2016 and assists first-time buyers by offering them a tax rebate of up to €30,000 if they purchase a new build home worth up to €500,000.
The other incentive, the First Home Scheme, was introduced in 2022 and gives first-time buyers an option for the government and certain banks to pay up to 30% of the cost of a new build home in return for a stake in the property.
Claims that the schemes have contributed to house price inflation have been used as a stick to beat the Government with before, and have re-surfaced in the election campaign because of separate plans by Fine Gael and Fianna Fáil to expand them both.
Fine Gael unveiled a pledge yesterday to increase Help to Buy grants by a third – to €40,000 – and to expand the First Home scheme to second-hand properties.
Fianna Fáil’s manifesto likewise includes a pledge to expand shared equity to second-hand homes, as well as a proposal to “protect and extend” Help to Buy.
In the opening stages of last night’s debate, Housing Minister Darragh O’Brien was asked by host Katie Hannon about claims that the schemes were contributing to house price inflation.
However, O’Brien claimed that “any independent analysis” of the schemes has shown that they are not inflationary, citing reports by the Central Bank and bank BNP Paribas.
Sinn Féin’s housing spokesperson Eoin Ó Broin was also asked by Hannon about his party’s plans to scrap the schemes if elected, and repeated the claim that they are driving up house prices.
“The real problem with the so-called Help to Buy scheme is that it does push up house prices, and the ESRI and the Central Bank have told the Oireachtas Housing Committee that,” he said.
Many independent experts agree, including both the ESRI and the Central Bank as Ó Broin claims.
In 2021, the Economic and Social Research Institute (ESRI) told an Oireachtas committee that the Shared Equity scheme would “very likely lead to higher house prices” because of an ongoing shortage of housing.
The Central Bank issued a similar warning later in 2021, suggesting that the scheme would create further demand for houses by potentially adding more households to the market when they otherwise wouldn’t be able to afford a home.
Meanwhile, a 2018 study from the London School of Economics also found that a similar Help to Buy scheme in the United Kingdom ”stoked the inflation of house prices” there.
Experts have also said that in a constrained housing market, incentives like Help to Buy and the First Home Shared Equity scheme do lead to house price inflation.
Two experts who spoke to The Journal yesterday in response to Fine Gael and Fianna Fáil’s election pledges also warned that the two schemes would contribute to house price inflation.
However, the problem is that it is difficult to say with precision whether this is the case and how much the two schemes contribute to an increase in house prices.
House price inflation is influenced by a number of factors, but the most significant are the amount of new houses available to buy at a given time (supply) and the number of people who are trying to buy them (demand).
Since the Government took office in June 2020, the average cost of a new home in Ireland has increased from around €256,000 to around €345,000, according to Daft.ie reports.
Daft.ie figures also show that during the same period, the number of second-hand homes available to buy fell from 19,510 in June 2020 to fewer than 11,400 in June 2024.
Other factors have been cited by experts as causing house price inflation in recent years, including wage growth, the loosening of Central Bank mortgage rules from January 2023, and savings built up by prospective house-buyers during the pandemic.
It is true that Help to Buy and the First Home Shared Equity Scheme have been in place during that time, but it should also be noted that Help to Buy existed when house prices fell after Covid hit in 2020.
Another expert, economist Ronan Lyons, recently outlined that even in 2019 – before the pandemic and when Help to Buy was already in place – house prices in every part of Ireland began to stabilise and actually declined in some places.
“Given what happened next, this important fact can easily be forgotten: before Covid-19, Irish house prices were falling modestly, because supply had caught up to demand,” he wrote in June’s Daft report on house prices.
The ultimate problem is that it’s difficult to say exactly how much the two schemes contribute to house price inflation, and whether the various other factors that lead to an increase in prices are more to blame.
But most experts agree that the schemes are a factor in house price increases.
During a section in which the Government’s record on housing was scrutinised, Darragh O’Brien claimed that Ireland’s social housing output is at its highest level in half a century.
The Minister said: “We’ve gone from about 20,000 homes a year – nearly half of which are supported by the State, by the way – and we’re building more social housing than we’ve done for 50 years.”
The 20,000 figure refers to the total number of homes (including those by private developers) built in 2020, the year the Government took office.
Housing figures for 2024 have not yet been finalised (because houses are still being built), so we have to use figures for last year to fully test this claim.
Official figures show that in 2023, the Government built 8,110 units of social housing. Notably, this was 990 units short of its Housing for All target of 9,100 units for the year.
The last (and only other) time the Government built more than 8,000 units of social housing in a single year was 1975, when local authorities built 8,794 social housing units.
That means that 2023 saw the construction of the second-highest number of social housing units on record – not quite the highest level in half a century, but at 48 years it wasn’t far off.
If the Government meets its target of 9,300 units this year, it will mean the highest number of social houses built in Ireland since records began (though again, figures for 2024 have not yet been finalised).
It should also be noted that the State’s construction of social housing has historically been relatively low.
After 1975, the Government’s output gradually fell back and voluntary and co-operative organisations stood in to make up the shortfall - along with private developers.
Near the start of the debate, the Government was also criticised for the drop in the number of people who own their own homes.
Social Democrats candidate Rory Hearne called on the Government to treat the housing crisis as an emergency, saying the level of homeownership was at its lowest point in decades.
“Fianna Fáil and Fine Gael talk about supporting people [...] we’re now in a situation where we’ve the lowest level of homeownership in 50 years,” he said.
Data from the Central Statistics Office (CSO) recorded during Census 2022 found that the level of homeownership in Ireland is currently around 66% - down from 68% in 2016 and almost 70% in 2011.
According to a previous Census release from 2016, the last time homeownership levels were near 70% was 1971, when the figure was 70.8%.
Current levels of homeownership are not quite as low as 1961, when the rate was 59.8%.
In another discussion on housing delivery, People Before Profit’s Richard Boyd-Barrett claimed that private developers were having an outsized influence on the Government’s ability to meet its own housing targets.
“For two years, [the Government] denied that their targets were way too low,” he said.
“Now they’ve been finally dragged into admitting that they need to double housing output. But even then, they are relying on private developers to do it.”
At one point, O’Brien interrupted Boyd-Barrett and said “the State’s building houses” three times.
So who is right?
Under the Housing for All plan, the Government set a target of 24,600 new homes in 2022 and 29,000 new homes last year.
Progress reports show that those targets were exceeded in both years, with 29,726 homes built in 2022 and 32,695 homes built in 2023.
However, those reports also show that the Government fell short of meeting its own targets for building social housing, acquiring social homes, delivering new homes via leasing arrangements and providing affordable and cost rental housing in both years.
In contrast, it vastly exceeded targets for homes delivered by private developers, without which it would not have met its own housing targets.
In both years, private developers were responsible for the construction of more than 20,000 homes – more than half the amount delivered in both 2022 and 2023.
Although O’Brien is correct to say that the State is building houses, Boyd-Barrett’s claim that the Government is relying on the private market to meet its housing targets is true.
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