Barry Cowen (Offaly, Fianna Fail)
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101. To ask the Minister for Finance his views on whether the first-time buyer's grant is having a destructive impact on the private housing market and leading to massive inflationary pressures in the price of homes. [17410/17]

Michael Noonan (Limerick City, Fine Gael)
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I assume the Deputy is referring to the Help to Buy (HTB) tax incentive.

As the Deputy will be aware, the HTB incentive was initially announced on 19 July 2016 as part of 'Rebuilding Ireland: Action Plan for Housing and Homelessness'. This plan contains a significant volume of responses to the current housing crisis, of which the HTB incentive is just one.  The comprehensive Action Plan takes a holistic approach in addressing the many interacting structural constraints affecting the housing market in areas such as planning and land use, as well as regulation and skills deficits in the construction sector. While the primary focus of the Action Plan is to tackle structural constraints, fiscal supports can play a supporting and time-bound role in addressing the current problems in the housing sector.

It is in this context that the Help-to-Buy (HTB) scheme should be considered. Its role is to complement the other measures in the Action Plan. The extent to which the scheme could lead to an increase in residential property prices will very much depend on the speed and efficiency with which structural supply constraints are eliminated and residential building activity increases. Therefore, the impact of the HTB incentive on property prices should not be considered in isolation from the impact of other measures contained in the Action Plan, which are primarily designed to increase supply. In my view, it is the lack of supply that is primarily responsible for driving house prices higher and I would point out that increases in house prices prevailed long before the introduction of the Help to Buy incentive. I would also point out that the HTB is targeted towards new build homes only, and to first-time buyers only, and it would be simplistic to designate this incentive as being the sole or the major contributor to house price increases.  Furthermore, the incentive is designed to help first-time buyers 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 those rules must also be satisfied and the HTB pays no role in relation to that aspect.

I wish to assure the Deputy that my Department continues to monitor developments in the property market including movements in property prices. In this regard, the Deputy may be aware that I have already committed to commissioning an independent economic impact assessment of the incentive which will look at, among other issues, its potential impact on property prices.  The contract for this assessment, following the completion of a competitive tendering process, will be awarded shortly.