Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I do not propose to agree to the proposed amendments. Notwithstanding that the help-to-buy scheme is scheduled to sunset at the end of next year, further support is needed in the delivery of new homes, as the situation remains as acute now as it was before and during the summer. Section 7 provides for the additional support to continue for 2021. As discussed, it is my proposal that the increased level of support will continue to apply to applicants who sign a contract for the purchase of a new home, or who make the first drawdown of a mortgage in the case of a self-build situation, during 2021.

At the outset, it is worth pointing out that the average price of a house purchased under the help-to-buy scheme has dropped marginally year-on-year in the period from January to the end of October this year, that is from €329,000 to €328,000. Regarding the specific points which these amendments seek to address, I should point out that non-tax-based housing measures, such as the Rebuilding Ireland home loan scheme, are matters, in the first instance, for the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, rather than for me.

In respect of the effectiveness of the help-to-buy scheme and its impact on the market, at the request of Deputies this policy has already been the subject of two independent reviews. The review of the impact assessment was published as part of budget 2018 documents and the report on the cost-benefit analysis was published on the day of budget 2019. The most recent of the reports concluded that there may have been a small increase in prices attributable to the introduction of the incentive. The primary driver of house prices, however, remained the continued gap between demand and supply. The evidence also suggests that following the introduction of the incentive, there was a market increase in supply, which can be attributed, in part, to the help-to-buy scheme. The analysis also found that the availability of the help-to-buy scheme has reduced the time required to save for all claimants and has improved the overall affordability of housing for these individuals.

Significant progress has been made in recent years to add to the construction of additional housing units. Before the onset of Covid-19, the number of housing completions forecast for 2020 was in the range of 24,000 to 26,000 units, which was an increase from the 21,000 completions recorded by the CSO in 2019. However, as a result of the Covid-19 restrictions, all non-essential construction ceased for a seven-week period between March and May 2020. Upon reopening, the sector had to adopt new safety measures, with the Construction Industry Federation, CIF, noting that new social distancing requirements could delay delivery of new homes by up to ten weeks.

According to the CSO, at the end of the third quarter there have been approximately 13,400 housing completions. The Central Bank projects that completions are expected to reach 17,500 units in 2020 and the current expectations are for approximately 22,000 and 27,400 units in 2021 and 2022, respectively.

Whereas the lockdowns and new safety requirements will continue to limit the total number of units completed in 2020, I am encouraged by the data which show that the sector is faring well in terms of rehiring workers who were previously in receipt of the pandemic unemployment payment. That sector is remaining open in this phase of public health guidance.

I will respond to some of the points made in the debate. It is important to place the scheme in the context of what it is worth for the average person on it and the benefit he or she gets. A recent examination found the average income of a married couple or a couple in civil partnership who made a claim for the help-to-buy scheme was €77,100 in total, with the basis of these earnings in the 2016 tax year. This would equate to two individuals earning a salary of approximately €38,500. With respect to some of the charges made about who is benefiting from the scheme and the effect this is having, the average figures for the people participating in the scheme show that the benefits flow to those who are either at or below average income.

It is worth putting the number of house purchases that the scheme affects in context. This leads to some of the requests that have been made of me. The total number of approved help-to-buy claims that have been made up to 30 September is 3,897. Across that period, the total number of new builds was 13,394, meaning 29% of new builds purchased here are being purchased by people in receipt of the help-to-buy scheme.

Claims have been made about the inflationary effect of the scheme. Two reports commissioned acknowledged that the scheme is having and can have an effect on house prices but we must look at this effect in the context of the general significant reduction in house prices that happened in the period up to 2011 and 2012. The total number of new builds that are being supported by the help-to-buy scheme is less than one from every three new builds. Claiming that the scheme is having significant inflationary effects, particularly this year, is at odds with the share of the first-time purchases that are being co-funded by the help-to-buy scheme.

Some requests were made of me for this scheme. Both Deputies Naughten and Canney asked that I commission a report on the scheme's operation if it were for house purchases beyond new builds, including second-hand homes. I wish to indicate to both Deputies that it is not a change I would be willing to make to the scheme. A broadening of the help-to-buy scheme focusing on existing housing stock would be far more likely to have an inflationary effect on the housing market, thereby unravelling the effect that I hope this scheme will have as a contribution as one of a number of measures to improve the affordability of our housing market. I hope it will support our housing market as it looks to recover from Covid-19.

Other points were made about the scheme.

Deputy Tóibín made the point that house prices have increased by €100,000 since 2011. He ignores the fact that in the period preceding that, we saw a dramatic decrease in house prices. While there has been an increase in house prices since then, in many if not all cases, they are still below, thankfully, the level of pricing we saw during the bubble. This reflects the macroprudential rules and the effect of ensuring that help-to-buy is not applicable to second-house homes. It is also the effect of the different decisions made by the Government to try to increase housing supply in recent years.

Deputies Barry, Doherty and Boyd Barrett made several claims about the operation of the help-to-buy scheme. I pointed to the number and percentage of new builds actually supported by the scheme, as well as to the conclusions reached by various reports on its operation. The charge was made, or at least inferred, that this is taking the place of what the Government is doing through encouraging, for example, expenditure measures for the delivery of new homes, or the increase in the amount of money going into the delivery of social housing, or the co-funding infrastructure to allow the delivery of new private homes to be built or the foundation of the Land Development Agency. Nothing could be further from the truth. Instead, we have a high level of capital expenditure going into either enabling the delivery of new homes or building them directly via the State.

Deputy Doherty referred to the decision in front of Dublin City Council tonight. I hope agreement can be made to allow those homes in question to be built. My understanding is that up to 50% of homes due to be built on the site in question will be for social and public use with a minority of them for private use. The city council is looking to build more than 800 homes on the site in question. While it is a decision for the councillors themselves, it appears that reaching an agreement on housing projects of that scale in the context of the issues private housing output is facing are the kind of decisions that can contribute to the recovery of housing output in 2021.