Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

First of all, the Minister did not prepare a report before introducing this scheme. The Indecon report makes reference to that fact and says that it should not happen again. No evaluation was carried out. We had a big talk earlier about how homeless families could benefit, but the Minister said that he could not introduce a vacant property tax as he would need all the statistics and so on. When it comes to putting money into developers' pockets however, the Minister just announces the measure and then carries out an evaluation a year later, an evaluation which basically says that it cannot tell whether the scheme has contributed to supply. What it says is that "[t]he Help to Buy (HTB) scheme is primarily but not exclusively a demand led measure and there is legitimate concern that, in a period of inadequate supply, the measure could result in increased inflationary pressures on property prices therefore reducing any benefit in terms of mortgage affordability." That is the key issue.

What is happening out there while the Minister is messing about with this scheme and putting €40 million of taxpayers money into developers' pockets? Let us look at the figures. There has been a 12.8% increase in property prices over the last 12 months. Does the Minister know where we are going? At this point, in November of this year, we have now exceeded the property prices of 2005. Within two years, 24 months, at the current trajectory property prices in Dublin will exceed the peak of the boom.

Let me tell the Minister what the report said again. It said that "[t]he Help to Buy (HTB) scheme is primarily but not exclusively a demand led measure and there is legitimate concern that, in a period of inadequate supply, the measure could result in increased inflationary pressures on property prices therefore reducing any benefit in terms of mortgage affordability." This is a con job. People feel good when they get this money into their pockets but when the house they are trying to buy, in Dublin for example, at €300,000 has gone up 12.8% in the last 12 months, any benefits are outstripped. These people's mortgages will now have increased by €33,000 or €34,000. To draw down €34,000 over a 30-year mortgage means one has to pay back €65,000. It is a complete and utter con job.

This is not leading to supply. The other thing which the report says is that "[t]he HTB measure does not appear to have had any significant overall impact to date on the level of supply." It has failed. The then Minister, Deputy Michael Noonan, told us that this scheme was about supply. He then told us that it was about helping people to get deposits together. Lo and behold, a couple of weeks later the Central Bank changed the rules. What does the report say? It says that "[t]here is however likely to be some purchasers who did not need the incentive suggesting an element of deadweight and particular affordability issues remain for those on lower incomes." The report tells us this. It does not give the Minister comfort to continue with this scheme. There is no evidence that this scheme is leading to supply.

As the report says, there is legitimate concern that it is causing inflationary pressures on property prices. We all know, because the statistics are there in black and white, that there is what is called deadweight in the scheme. That is to say that the vast majority of people who are availing of the help-to-buy scheme are not those who require the scheme to meet the Central Bank's deposit requirements. Why the hell is the Minister continuing with a €40 million incentive? This money goes directly into the pockets of developers. At a time when there are constraints on supply, additional money provided into the system increases pressures. Those pressures result in house prices increasing. That is why we are seeing the type of increases in house prices we have seen in recent months.

In the last year house prices in Dublin city have gone up by 13.9%. They are approximately 103% or 104% above the 2005 baseline. They are 24% off the peak prices. The Minister should remember that we are on course to return to peak property prices within two years. This is happening. What can we do to stop it? There are many things which we can do, but we can focus on this scheme for now. As the report says, "there is legitimate concern that, in a period of inadequate supply, the measure could result in increased inflationary pressures on property prices". There is no reason in the world to continue this scheme. The Minister can bluff and bluster all he wants but, as the report says, there is legitimate concern that the scheme is contributing to that 12.8% increase. Once these increases happen, it will be very difficult to reduce them again, even when supply increases.

The Minister is pricing many people in the Dublin market out of house ownership. People of my generation and younger, people in their mid-20s, are telling me that they will never aspire to own a home. It is simply beyond their reach. These are people who are living and working in Dublin. The opportunities which their parents had are no longer there. They just cannot see a way forward because of current property prices. We know where we are going. House prices are increasing more rapidly now than ever before. The help-to-buy scheme triggered some of that. The Minister is continuing with a demand-side measure while there is a serious supply issue. This does not make any sense on any level and there is nothing in the report which should tell the Minister that it does make sense at a time when house prices are increasing at the current rate and when there is inadequate supply.

I will point to one more issue, which I will come to again later as it relates to other things we must deal with in the Finance Bill. In Dublin 50% of homes are being purchased by institutions, the Irish Real Estate Fund and so on. They are outbidding first-time bidders. These homes are not being bought by first-time bidders. That is happening because in previous finance Bills the Minister incentivised those funds to snap up the very few houses which are available in Dublin and elsewhere. I am strongly arguing that the help-to-buy scheme has no merit, that it should be immediately discontinued and, at the very least, it should be monitored in respect of its effectiveness and value for money. I am putting the Minister on notice. Just as the Minister is complicit in accepting and normalising homelessness because of his failure to act on a vacant house tax and to provide sufficient resources to build social housing, he is also facilitating the dramatic increase in house prices which will prevent a generation acquiring homes in areas of this city and elsewhere throughout the country.

There is no point crying about this in a years' or in two years' time when we will all be asking how the hell we got back to peak property prices. This is what will lead us there. It will be because the Minister introduced a measure which was not thought out. He commissioned a report which is inconclusive but which says that there are legitimate concerns that the scheme is a demand-side measure which is having no impact on supply and which also says there is deadweight in the scheme. The Minister thinks that it is appropriate to continue giving €40 million away on this measure. It does not make any sense.