Barry Cowen (Offaly, Fianna Fail) | Oireachtas source

The backdrop to the budget is a housing crisis that is being felt in every part of the country. We face intertwined problems of endemic homelessness, spiralling rents, insufficient social housing and a stagnant private market. For an entire generation, the basic aspiration of home ownership is slipping away. The dream of having a place to call one's own around which one can build a vibrant family life and play an active role in the local community is disappearing. Instead of putting down roots, young people are paying up to landlords.

We need to give ordinary workers who are getting going in their lives, who are newly married or who are starting a family a real chance at owning their own homes. However, the first time buyers grant announced is not the solution they need. The Minister for Housing, Planning, Community and Local Government, Deputy Coveney, has conceded that the first time buyers grant is not a silver bullet, but he is firing the starting gun on a new property price race. Overall, the €20,000 grant will see more money chasing the same few homes. Builders will simply boost prices to get higher profits, which they need or which their banks demand. The cost of building a new home will remain fundamentally unaddressed. A young couple will find themselves using the grant just to try outbid other couples armed with the same amount looking at the same home.

This will have wider implications beyond just first time buyers. Homeowners looking to trade up are the Cinderella of the property market. These families, who have outgrown their old home or who have just escaped from negative equity, will also be hit by artificially spiked prices. Those trading up have been entirely neglected in the Central Bank rules and will now have to compete with first time buyers armed with an additional €20,000 to outbid them. The help to buy scheme or, rather, the help to sell scheme, is a demand-side solution to a supply-side problem

The extremes of the scheme are the sharp end of Fine Gael's two-tiered outlook on this country. The €600,000 limit imposed is completely off the wall. It is out of sync with the reality of ordinary first time buyers. The average overall cost of providing a three-bed semi-detached house of 1,214 sq. ft. in the greater Dublin area is €330,493, including VAT. The €600,000 limit is almost double this, which effectively turns the scheme into nothing more than a mansion grant. A new home worth €600,000 would require a €98,000 deposit and an income of at least €145,000. This is four times the average industrial wage. A couple earning this when starting out in life does not need €20,000 from the State, which is struggling to tackle a social housing waiting list of 130,000 homes. It means ordinary taxpayers are directly subsidising people earning four times the average wage to buy a home worth three times the national average price of a three-bed semi-detached house.

I do not agree with the scheme. I expressed my concerns to the Minister, Deputy Coveney, about the potential of the scheme a number of weeks ago. I asked him to carry out an impact assessment. This morning, the Minister for Education and Skills, Deputy Bruton, told us this was carried out. If it was carried out, and I doubt it very much, it will have serious implications for the Cabinet and it needs to be published immediately.

I beg members of the Government to examine the scheme and see the blatant unfairness of it at its extremes, by which I mean not capping the grant for houses at €400,000 and allowing the grant to €600,000. Those who can afford to buy such homes are not the squeezed middle. They are not an ordinary young couple, just married, looking to buy a semi-detached house and start a family. They are not young gardaí, young nurses or young teachers. They are not young professionals who have studied hard and worked hard while their parents paid a lot to put them through college. What the Government is financing and giving to those who can afford homes at this rate is a mansion grant. If they were considering buying a house three weeks ago for €580,000 they do not need an extra €20,000 now to pay €600,000 for it. This will undoubtedly turn a two tier recovery into a two tier property market. Those first time buyers a few years into their careers, struggling to save and pay rent will be not be served by further spiking prices on homes that will never be within their reach.

I want to make clear that Fianna Fáil believes in home ownership. We believe it is good for families and good for communities. Having something to pass onto future generations and a firm sense of place is a basic and fundamental human desire.

This means that the State should provide the framework and stable market to enable people to buy their own homes in keeping with their needs, but we cannot allow that dream transform into a nightmare cycle of highs and lows and booms and busts. We put forward a clear proposal in our manifesto to help first-time buyers to save their deposit. It is a gradual scheme over a number of years that would ensure prices did not increase rapidly while helping ordinary couples to get the money together to buy their first home. In contrast, the Government has gone for a big bang approach. It is an electoral Trojan horse that is using young couple’s legitimate aspirations against them.

The key issue to be addressed is supply. A total of 25,000 units per annum are needed to meet demographic demand. We need to address the cost of construction rather than turbo charge house prices. The VAT rate, finance costs, certification costs and development levies could all be reduced by direct State intervention, but the Government has not chosen to take that route. My colleagues and I are committed to playing a constructive role and will table amendments to the Finance Bill when it is brought forward. I hope the Minister and the Government are willing to engage in meaningful discussions on how we could, at the very least, improve the scheme if it is to proceed. If we do not learn from the past, we are condemned to repeat its mistakes. Let us not go back to back to the future with this proposal. We can do better and an entire generation who are renting and scrimping and saving every spare few bob deserve better, but they will not be served by this scheme.

I mentioned to the Minister a number of weeks ago my concerns about the proposals being reported in the media related to the scheme. I said that at the very least he needed to conduct a regulatory impact assessment and make the findings public. If that has been done, we need to see them quickly, but I have my doubts because every dog on the street will tell us the impact the scheme will have. It will drive price increases, while the Government fails to address the supply issue. The Minister refused to consider a proposal put forward by the Housing Finance Agency under which the State would take equity in homes. In the event of an upturn, this would generate a benefit to the State and if there was a downturn, it would mean that there would be a safety net for purchasers. That would have been an acknowledgement of what happened in the past and learning from it. Instead, we have the big bang approach and populist politics. It is an effort to appease south Dublin Fine Gael voters. No mistake should be made about this. A cap of €400,000 needs to be set in Dublin city where the crisis is greatest and in adjoining counties such as Louth, Meath, Kildare and Wicklow. I plead with the Minister not to allow this to happen. The Government is sleepwalking into another crisis and price war. If the limit was set at €400,000, land prices would be fixed and if people wanted to continue hoarding land, the Minister could levy them. At least they would have to cut their cloth to the measure of the building sector which could then provide homes to meet demand. People are struggling as it is to buy homes at a cost of €360,000 or €380,000. That will not be the case after the scheme comes into force and I ask the Minister to reconsider. We will table amendments which we expect him to take seriously. We also expect him to acknowledge that what he has proposed cannot be allowed to happen.

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