Mick Barry (Cork North Central, Solidarity) | Oireachtas source

Who benefits from the help-to-buy scheme? We will deal with the issue of first-time buyers in a moment. It is quite clear that developers gain significantly from this Government policy. It is not even necessary to have studied leaving certificate economics to know that if supply is not matching demand by a long shot, and the Government increases demand with a policy like this, it will drive up the price of the commodity, in this case the house. It is not just abstract economics that indicates that; the reality on the ground bears it out. Almost immediately after this measure was announced in the budget, house prices in Cork increased by up to €10,000. The information I have from those in other big cities is that the story is much the same elsewhere.

Therefore, developers gain directly from this policy. Private banks also gain; developers are not the only winners. Not only does this increase the wherewithal for deposits, the mortgages will last longer with more interest being paid over the lifetime of those mortgages. Therefore, it is good news for private banks and increases their profits.

The extent to which it benefits first-time buyers is questionable. Certainly, this scheme will make the difference for some first-time buyers. Many of them will need to pay more interest in the long term to the banks. However, many people who aspire to become first-time buyers will not benefit from this scheme. That is particularly true for those on lower incomes and younger people. Many lower-paid workers and younger workers will not have paid €30,000 over the past four years and effectively will be locked out from the scheme.

One could argue, if this was the only tool available to the Government and the State, that one should consider it. However, it is not the only tool. There are other and far better tools available to the State. For example, many observers of the housing scene and not necessarily people on the political left would agree with me that the money the State spends on this scheme would be far better spent if it was provided to the local authorities and those authorities were allowed to use it to build council houses and genuinely affordable houses for people on low and middle incomes, in particular. If we look at this in the round, while many first-time buyers will have hopes that this scheme might make the difference for them, in general, it benefits the developers first and the private banks second. Many aspiring first-time buyers do not benefit from it. There are better alternatives. The money should be going to social and affordable housing built by the State through the local authorities.