Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The help-to-buy scheme was introduced in 2017 with the purpose of assisting first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. The Deputy will be aware that the Finance Act 2022 extended the help-to-buy scheme for a further two years to the end of 2024.

To date, the scheme has been a significant support for first-time buyers of new homes. Since its inception and until April 2023, some 38,557 first-time buyers either singly or as part of a couple, have benefited from the scheme.

I note the Deputy has previously raised concerns regarding the potential for the scheme to exacerbate housing prices. As previously stated, policymakers were aware at the time the scheme was being developed that it was not without risk. Likewise, they were aware there was a danger, against a background of constrained supply, that the initiative could serve to increase prices for new homes, thus potentially undermining to some extent the affordability aspiration of the scheme. However, on all occasions when the matter was formally examined to date, concerns in this regard were not borne out by the review data.

Studies carried out by Indecon economic consultants found that the main driver of house prices was the mismatch between supply and demand rather than the existence of the scheme. Similarly, the review by Mazars last year found no definitive evidence that help to buy pushed up the price of new houses. In fact, Mazars found that the prices paid for new homes by people who received the help-to-buy relief were slightly lower than new house prices in the economy in general, which was likely because of the €500,000 price eligibility cap. Last year's review recommended that a more appropriate, non-tax expenditure policy mechanism to address the market failure should be designed to replace help to buy. Having considered the report, in the Finance Bill last year, my predecessor proposed extending help to buy for a further two years in its current form. This approach was in accordance with a recommendation in the report and took account of both the cost of the scheme to date and the need for certainty in the market, while awaiting the increase in new housing supply envisaged by the Government’s Housing for All strategy.

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