Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I answered a similar question put by Deputy Michael McGrath, but I will read the reply to this one also. As the Deputy will be aware, the help-to-buy incentive was announced as part of Rebuilding Ireland: Action Plan for Housing and Homelessness. The plan contains a significant volume of responses to the current housing crisis, of which the help-to-buy incentive is just one. Therefore, the impact of the incentive on property prices should not be considered in isolation from the impact of other measures contained in the action plan which have been primarily designed to increase supply. My Department continues to monitor developments in the property market, including movements in property prices. In that regard and as I outlined, the Deputy may be aware that I have recently commissioned an independent economic impact assessment of the help-to-buy incentive which will be completed by Indecon Economic Consultants. The report will examine its potential impact on property prices, among other issues, and is due to be presented to me by 31 August.

In my view, it is the lack of supply that is primarily responsible for driving house prices higher. I point out that increases in house prices prevailed long before the introduction of the help-to-buy incentive. I also point out that the scheme is targeted at new build homes only and first-time buyers only and that it would be simplistic to designate the incentive as being the sole or major contributor to house price increases. Furthermore, the incentive has been designed to help first-time buyers to obtain the deposit required to facilitate the purchase of a home. Therefore, it helps first-time buyers to meet the loan-to-value requirements of the Central Bank's macro-prudential rules. However, the loan-to-income requirements of these rules must also be satisfied and the incentive plays no role in relation to that aspect.

Additional information not given on the floor of the House

The help-to-buy legislation, as passed by the Oireachtas in the Finance Act 2016, contains a sunset clause of 31 December 2019. I believe suspending the help-to-buy incentive at this point, as suggested by the Deputy, would be detrimental to those first-time buyers who are availing of or planning to avail of the incentive in order to facilitate the purchase of their first home. Furthermore, I do not believe such a suspension would have any impact in reducing the price increases being experienced in the market. However, I will review the position as part of my deliberations for budget 2018 when the results of the impact assessment are available.

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