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IN RECENT MONTHS, many commentators have blamed the Help to Buy scheme for increases in house prices. This is an assertion that a number of leading economists now dispute.
Ronan Lyons, Marian Finnegan and Dermot O’Leary of Goodbody now all concur that it’s scarcity in the second-hand home market that is resulting house price increases. Basic economics: scarcity is driving up prices.
Some 90% of house buying activity is currently taking place is the second-hand homes market, a market where prices are increasing due to a lack of supply. This is a market in which those availing of the Help to Buy scheme are not operating.
Little activity in starter home market previously
Any house price increase in the first-time buyer focused starter home market is probably driven by some small level of new supply coming online as a result of the scheme.
Previously, there was very little activity in this segment as those thousands of first-time buyers were excluded from the market. Now the scheme has enabled first-time buyers to acquire mortgages, banks have begun lending to builders to build starter homes again.
Putting first-time buyers into new homes is a sure way to reduce pressure on prices in the second-hand home market, and to reduce pressure on social housing waiting lists, rents and all the other terrible facets of this housing crisis.
A temporary measure
The Help to Buy scheme was brought in as a temporary measure to alleviate the crisis in housing supply in Ireland, yet now, less than a year later, before the benefits of the scheme have had the time to come to fruition, it is under review.
The Help To Buy scheme has been a significant contributor to the growth in residential construction activity. Any suggestion of a withdrawal of this scheme could have a detrimental impact on confidence and the ability of house builders to maintain and increase their residential building programmes.
If the price of a new home is €250,000, it will cost the government €15,000 or so under the Help to Buy Scheme and yield €100,000 in direct and indirect revenue, that’s a significant return to the Exchequer that can be allocated to infrastructure investment, social housing, increasing services or reducing our debt.
To date the Help to Buy scheme is justified by the positive impact it is having in terms of both boosting supply, stemming from greater investment in residential building, and in ability of first time buyers to purchase a newly built home.
Residential building has been made more viable
Our members can confirm that residential building has been made more viable in key locations on account of its introduction by assisting prospective house purchasers with the deposit level, which is now required under the Central Bank’s macro-prudential mortgage lending rules on Loan to Value. It is quite simple, first time buyers can buy homes, so building them becomes viable.
According to the Irish Housebuilder Association, the HTB scheme has been a major factor in their ability to present viable residential development proposals to their funders to secure the required development finance for building starter homes again. This is reflected in the increase in residential building activity experienced since introduction of the Help to Buy scheme.
The Construction Industry Federation estimates that the level of new residential completions for 2017 will be in the region of 18,000 units. This compares to 12,666 units in 2015, illustrating an overall increase of 42% from 2015-2017.
Tom Parlon is the Director General of the Construction Industry Federation (CIF).
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I really appreciate your advice every week I’m a gardener in my 60s and learn something new every week
The follow the sun because one side of the plant grows faster than the other depending on the sun’s location and that pulls the plant around.
It is far more likely that it is in response to a daily rhythm that we experience,of course for different reasons -
https://www.youtube.com/watch?v=OfBsWFfWkGE
Sunflowers are far smarter than some Journal readers who insist on following an impossibility , after all, the sun rise and sets each day in response to one rotation -
” It is a fact not generally known that,owing to the difference between solar and sidereal time,the Earth rotates upon its axis once more often than there are days in the year” Harvard
@Jenny mcCarty: It is rare to encounter a person who can reason properly and have some sense of why our nation and the international community ended up with horrific notions such as one weekday and one rotation are not the same thing. I have dealt with these issues for many years and I am familiar with where people jumped the tracks, in this case they modelled rotation using a clock and came up with a value less than 24 hours with the accumulation over the year giving them one more rotation than weekdays. Common sense should intervene but these people are unapologetic while the young sunflowers simply fix their gaze on the central and stationary Sun and allow the rotation of the Earth to do the work once each weekday and every weekday.
@Gerald Kelleher: research flat earth and you’ll have a perfectly valid reason as to why sunflowers follow the path of the sun
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