THE GOVERNMENT IS being urged not to pull the trigger on a planned mortgage guarantee scheme designed to help first-time home buyers.
Making its pre-budget submission today, estate agents Savills argue that the measure should be “avoided for now” and re-examined in 12 months time.
The plan proposes that a portion of mortgages to first-time buyers will be guaranteed by the State. It’s hoped the plan will encourage banks to begin lending more and also help to get unemployed builders back to work.
But Savills’ economist Dr John McCartney is warning that it would just fuel the continued rise in house prices.
“All that will be achieved by giving buyers more money to spend on housing is further inflation,” he says.
The risk is that this could feed through to expectations of further price growth and the reinflation of a housing bubble. However, the case for such initiatives could be re-examined in 12 months time when we have greater clarity on the supply of mortgage finance and new homes construction.
But Savills are encouraging the Government to ditch the above measure in favour of others. They want stamp duty to be eliminated for people moving to smaller houses.
They say that many family size homes are being occupied by couples and single people and that more transactions would allow for “better matching” of property.
Other measures the are proposed include a reduced VAT on new homes, reduced development levies, and an extension of the exemption on ‘gift taxes’ to other relatives as opposed to just parent-child.
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