Latest news with #Help-to-Buy
Irish Independent
2 days ago
- Business
- Irish Independent
Demand for housing is now the second highest in Europe with prices surging
Close to one in five consumers in this country are looking to rent or buy, the Banking and Payments Federation Ireland said, quoting European Central Bank statistics. Demand for housing in this country is now the second highest in Europe, after the Netherlands. The banking lobby group said 17pc consumers in Ireland, or almost one in five, report that they were looking to rent or buy. This is according to the February 2025 ECB Consumer Expectations Survey. More than one in four renters were looking for accommodation. And a fifth of those with a mortgage were actively looking for new housing. Banking and Payments Federation chief executive Brian Hayes said the strong demand for housing, especially among first-time buyers, was also evident in the fact that 17,144 applications were received by the Revenue Commissioners for Help-to-Buy scheme in the first four months of this year. This is almost 5,000 more than in the same period of last year. But supply is failing to come near to matching demand. Only one in 10 owner-occupiers said they were 'rather likely or very likely' to sell. The latest Housing Market Monitor Q1 2025 from the Banking and Payments Federation Ireland (BPFI) also shows that housing commencement numbers for the first four months of 2025 are only around 40pc of those in 2023. They are now at similar levels to those seen in 2016, a fact that means it could be years before the housing crisis eases. ADVERTISEMENT Planning permissions declined by over 21pc between 2023 and last year, the banking lobby group's report shows. Mr Hayes said Ireland has seen substantial population and employment growth in the past decade. With that has come a sharp increase in housing demand, during a period where the supply of housing has fallen behind, he said. 'We know that Ireland's population increased by around 735,000 people between 2014 and 2024, while in the same period employment increased by nearly 739,000,' Mr Hayes added. 'Meanwhile, housing completions in Ireland declined in 2024 for the first time since 2013, excluding the period between 2020 and 2021, when the pandemic affected activity significantly.' He said that on a rolling 12-months basis, a total of 30,356 units were completed to the end of March 2025 compared with 31,681 units during the 12 months ending March last year. But at the same time there continues to be strong demand for mortgages, with 9,190 mortgage drawdowns in the first quarter of 2025, valued at €2.8bn. 'Updated housing requirements must be incorporated into the planning system as soon as possible,' Mr Hayes added: Central Bank figures show that mortgage rates eased slightly in April, the third month in a row. And the largest servicer of mortgages on behalf of vulture funds, Pepper, has promised more rate reduction for the 'mortgage prisoners' trapped with it.
Extra.ie
23-04-2025
- Business
- Extra.ie
Severe warning on extending Help-To-Buy to second-hand homes
Surging house prices could rise even more if plans to extend first-time buyers' grants are followed through on, Finance officials have warned. Internal briefing documents prepared for Finance Minister Paschal Donohoe, obtained by caution that extending grants to second-hand homes, which has since been provided for in the Programme for Government,' represents an additional upside risk to prices'. The Help-to-Buy and First Home schemes, which only apply to newly built properties, are widely agreed by experts, including the ESRI and Central Bank, to have driven up house prices. Minister Paschal Donohoe. Pic: Leah Farrell/ The Opposition says that if second-hand homes are now included, it would 'turbo-charge' inflation and push even more people out of the property market. The price of new and second-hand homes has soared in recent years, with a report from DNG estate agents last month finding the average price of a resale property in Dublin is almost €600,000 – an increase of €50,000 in 12 months, even while excluded from the grants. Former finance minister and Fianna Fáil TD Michael McGrath warned against the move of extending grants ahead of last October's budget, saying it would 'provide no incentive effect to encourage the building of new homes and would be likely to have a significant dead-weight element and a high Exchequer cost'. Despite this, Fianna Fáil and Fine Gael both campaigned on including second-hand homes in the grants in the November election. Michael McGrath. Pic: Sam Boal/ Mr Donohoe's Fine Gael party pledged to expand the Help-to-Buy scheme to include second-hand homes if re-elected. The scheme provides first-time buyers with an income tax rebate of €30,000 if they purchase a newly built home up to €500,000. During the election, Fine Gael pledged to increase this to €40,000 and include second-hand homes. Fianna Fáil committed to including second-hand homes in the First Home scheme, which allows the Government and banks to provide up to 30% of the property's cost in exchange for a proportional stake in the home. Pic: Getty Images The promises were branded as 'classic auction politics' that were 'using young people as a tool' during the campaign by Technological University Dublin lecturer and housing expert Professor Lorcan Sirr. The Programme for Government, agreed between Fianna Fáil, Fine Gael, and the Independents, commits to 'retain and revise' Help-to-Buy. It also says it will work with banks to 'expand the First Home scheme to first-time buyers of secondhand homes'. Both schemes are 'demand-side' supports, meaning they help individuals purchase homes rather than increase housing supply. A briefing note for Mr Donohoe, last month, warned that extending 'demand side' supports to the second-hand market risks stoking home inflation further, at a time when falling interest rates are making housing more affordable. Paschal Donohoe. Pic: Niall Carson/PA Wire/PA Images 'Lower interest rates and robust income growth will improve the purchasing power of buyers, while the potential for extension of demand-side measures to existing dwellings represents an additional upside risk to prices,' the officials wrote. They noted that second-hand home sales are now the primary driver of residential property prices'. 'Rising property prices continue to reflect a structural shortage of supply, with strong demand for existing dwellings now the key driver of price growth,' the officials wrote. Sinn Féin housing spokesman Eoin Ó Broin, whose party campaigned to phase out Help-to-Buy during the election, told that adding second-hand homes to the schemes would 'turbo charge' inflation. Pic: georgeclerk/Getty Images 'If you were to extend Help-To-Buy or First Homes, or worse, both, to second-hand homes, all you are going to do is turbocharge what is already a high rate of inflation,' he said. Mr Ó Broin also said that the consequence of including second-hand homes would be to lock more people out of the housing market, adding: 'This is a disaster of a policy and the Government shouldn't proceed with it. 'Not only is the advice [from officials] correct, I would suggest you won't find a policy expert or economist who will disagree with it,' he said. There have also been warnings from within the Government's own ranks at such a move. On May 21, 2024, Ireland's European Commissioner, Michael McGrath, also a former finance minister, ruled out extending the Help-to-Buy (HTB) scheme. Eoin O'Broin. Pic: Leah Farrell/ He said: 'HTB is specifically designed to encourage an increase in demand for newbuild homes in order to support the construction of an additional supply of such properties. For a property to qualify for HTB, it must be new or converted for use as a dwelling, having not previously been used as a dwelling. A move to include properties which were previously used as residential homes/second – hand proper – ties within the scope of the scheme itself would not improve the effectiveness of the relief; on the contrary, it could serve to dilute the incentive effect of the measure in terms of encouraging additional supply.' He added: 'For these reasons, there are no plans, at present, to extend the HTB scheme to include such properties.' Pic: Getty Images When asked if second-hand homes would be added to the HTB scheme, a Department of Finance spokesman directed to a recent parliamentary question response from Mr Donohoe, in which he said it will be considered in the next budget in October. Mr Donohoe said: 'Any revisions to the scheme would have to be considered in advance of the annual Budget and Finance Bill processes, having regard to the Department of Finance Tax Expenditure Guidelines and the sound management of the public finances; and would take into account the effective operation of the scheme and the impact any proposed changes would have on the broader housing market.' A Department of Housing spokesman said work is ongoing to assess the impact of the proposed change. He said the First Home scheme is 'being examined by the department and Housing Minister [James] Browne' with analytical and technical work underway to look at the potential for such an expansion as soon as possible.
