A €50,000 report on the impact of the help-to-buy scheme for first-time buyers is to be delivered to the Department of Finance by the end of August.
Finance Minister Michael Noonan is commissioning external consultants to examine the impact of the controversial scheme and wants to know if it has resulted in house price inflation.
When Mr Noonan unveiled the scheme in October’s budget, he pledged that a study would later be undertaken into its effect on the country’s dysfunctional housing market.
The Government has insisted that the help-to-buy incentive should increase demand for “affordable, new-build homes from first-time buyers”, resulting in an additional supply of such properties.
But last week, the European Commission criticised the help-to-buy boost, warning that it could push up house prices without adding to housing supply.
Residential property prices rocketed 8.1pc last year across the country, compared to a 4.6pc increase in 2015, according to the Central Statistics Office.
The help-to-buy measure gives first-time buyers a 5pc income tax rebate up to a maximum of €20,000, on the purchase on a new home valued at up to €500,000. Self-build properties are also covered. About 3,000 people have so far applied for tax rebates under the scheme.
Figures published this week showed that €513m of loans were approved for home purchases in January – a 59pc surge on January 2016.
First-time buyers have driven the increase, with nearly half of January’s mortgage approvals earmarked by banks for that market segment.
Looser Central Bank mortgage rules for first-time buyers have also made it easier to buy homes.
The Department of Finance has just issued a request for tenders from economic consultants to undertake a probe of the help-to-buy scheme. The department notes that the likely cost of the study will be €50,000.
“It is anticipated that this study should assess whether the policy objectives on the supply of new homes as set out by the Minister are being met, what impact (if any) the scheme is having on new and second-hand house prices, and what impact the scheme is having generally on the residential property market,” the tender document published by the department explains.
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