Charlie McCreevy (Kildare North, Fianna Fail)

That is what happens when there is a high level of demand. The abolition of the first-time buyer's grant can be compared to interest rate changes but I do not think it will have the same effect. The new measure is targeted at the individual who will benefit when he or she completes the transaction by signing up for a mortgage and starting to make repayments. The new system which involves tax relief at source for mortgage interest relief will be far more effective.

First-time buyers who do not purchase new houses, who comprise 15% of the total, will be in a stronger position as a result of the budget. VAT is not charged on second-hand houses. There is no stamp duty on such houses with a value of less than €195,500 and it is charged at a reduced rate of 3% on houses worth up to €254,000. There is additional value to a couple over seven years of new mortgage interest relief of €2,818. If one assumes an average purchase price of €179,000, first-time buyers will pay €1,591 of extra VAT but they will gain an additional €2,818 over seven years, giving a net gain. Without wishing to break the rules of Cabinet confidentiality, I am sure Senator O'Rourke will confirm that I would have liked to have abolished new house grants a considerable time ago. It was not a secret that I was trying to do so.