Budget 2017 could have big implications for the housing market

Budget 2017 could have big implications for the housing market

Budget 2017 will be announced next week with plenty of interest in it from a property perspective.

The Government is widely expected to introduce a number of measures to address the lack of housing supply, with not only a ‘Help-to-Buy’ scheme mooted but also potentially measures to help reduce construction costs and reduce planning constraints by circumventing lengthy local authority procedures.

A recent MyHome.ie survey, contained in our Q3 Property Report released earlier this week in association with Davy, found that many are predicting a tax rebate for first-time buyers.

The fact only 11% of respondents to the survey expected a government scheme to provide cheap loans to buyers, along the lines of the UK Help-to-Buy schemes, shows that at least people are against a return to the days of cheap credit.

Indeed, the majority of those question on the matter at 48% said they would prefer measures to help homebuilding with 40% seeking tax reliefs for homebuyers.

Speculation in the papers today suggest a first-time buyers’ grant worth up to €20,000 will be announced but only remain open for a limited period, which could be as short as two years.

This is because Minister for Finance just wants to kickstart construction rather than for it to become a standard measure.

The Government’s housing plan, ‘Rebuilding Ireland’, is based on package of measures until 2021 but it is expected that the first-time buyers’ grant will have a much shorter lifespan, possibly just two years.

Final details of how the grant will work, including the thresholds for qualification, are still being finalised.

First-time buyers will be able to claim 5pc of the value of a new build back through an income tax rebate according to the reports.

What would you like to see done?

  • Are the measures being discussed enough to help ‘kickstart’ the market?
  • Should more be done to help builders get back building again?
  • What would you like to see implemented in Budget 2017?

Have your say below…

There are 8 comments for this article
  1. Patricia Cleary at 12:38 pm

    Agree with Deirdre on the new builds being bland and boring we are more interested in a second hand home, me being a second time buyer and my husband never owning anywhere before. I would like to see the required deposit being put back to 10% as most people including ourselves are stuck in the rental market we can afford a mortgage no problem but its the 20% deposit is near impossible to save with paying high rent, the rent we pay at the moment is more than what a mortgage would be.
    Banks just need to stick to the 3.5 times rule when lending and carry out strict checks just have a bit of cop on when lending to people, if they did that and kept the deposit at 10% everything would be fine.

    There is no help out there for people who want to trade up or couples who are like us where one is a FTB and the other is not, I wont be making a profit from the sale of my apt which is fine but you are penalized for being a second time buyer.
    The price of houses is getting out of control now too and the government is doing nothing about it.
    We have to now look at purchasing outside of Dublin or else making a move to another country as we just don’t feel there is anything for us here anymore.

  2. Casper at 6:08 pm

    There we go again. An incentive for first time buyers but only for new builds! Basically, the government is not helping first time buyers but the builders as these guys will just increase the cost of these homes they build by whatever percentage the incentive is and sell them on. Considering that there are very few new builds outside of Dublin not many families outside of the city will benefit from it. What a sham! Disgusting and pathetic.

  3. Pedantic Panda at 3:01 pm

    Sadly there’s been little strategy to diversify growth a bit and so most of the issues are concentrated in Dublin although rents have certainly spiked massively in Cork too in last year or two. There’s a finite supply but the people keep coming and rental/purchase prices go up and up and up. I think that the current mortgage rules need to be left alone for another while as they’ve cooled things a little but those that can’t afford a home now should, as Simon says, be wary that future circumstances can get worse instead of better. Things have a bit of a bubble feeling to me at the moment even though we may not be fully there yet. More supply would certainly help though – this is where efforts need to be concentrated for now!

  4. Simon Factor at 1:04 pm

    ‘at least people are against a return to the days of cheap credit.’ Nobody is against cheap credit, its too much credit being extended to people who either cannot afford or decide its not worth trying to pay it back that causes problems. Mortgage rates in Ireland are more expensive than those in Europe however the banks in both areas are sourcing credit at the same ECB rate to lend on to home owners.
    Subsidising first time buyers so that they do not have to save a deposit to buy a home is reckless and unfair to other home-buyers and tax payers, the problem is supply and the victims are all home-buyers not just first time buyers who already have the advantage of lower deposit requirements.
    A lot of folks in the 30’s and 40’s who have kids now and as Bertie put it ‘Got off the fence and stopped cribbing and moaning’ in the last boom can tell you stories of waiting stressful years to sell their ‘starter’ homes to get somewhere more suitable for a family, ten years of paying a mortgage to simply sell and be thankful you have no negative equity and then face a 20% deposit requirement is a very bad situation. Renting with kids in Ireland at the moment is not for the faint of heart.
    Why should these families not get a tax rebate? Does the current generation not see they are getting sold a pup and that they may get trapped if they ever have families and the market drops again?

  5. Leo at 12:32 pm

    Give me a break, this same Government has still not done a damn thing for existing home owners who are being screwed every month on their mortgages by banks they were so quick to bail out several years ago. Oh but if it was something to do with multi national tax avoidance you can be sure they’d be sorting it immediately.

  6. Pedantic Panda at 12:23 pm

    Deirdre makes some good points – plenty of potential renovation projects are begging for attention in various city and town centres around the country. As well as helping the housing issues, they have the bonus effect of a bit of urban renewal too where dilapidation has set in.

  7. Pedantic Panda at 12:09 pm

    Why the hell is the tax-payer subsidising first-time buyers in this way? Clearly it’s supply is the problem – injecting more money into the market will only drive prices higher as first-time buyers will now bid €20k more than they could before. It’s idiocy. Maybe some old-school mortgage interest relief would have been a way of helping without further heating up the market. We’re heading quickly back to the good ol’ bad ol’ days and builders with the hand out, not because that they can’t make any money (which they’d have been glad of 5/6/7 years ago) but because they feel that they can’t make enough money. Tax breaks for the jokers who helped put us in the mud and payed nothing themselves – big laff!

  8. Deirdre at 12:07 pm

    As a potential first time buyer in a year/2 year’s time I am both pleased and nervous about the implications. I fully support anything that is done to bring down construction costs and unwieldy laws. This will have long term benefit which are vitally important. However, giving short term aids to buyers makes me nervous as this has the potential to push up prices, negating the Government Grant for first time buyers and making it more expensive for all.

    On another note I think it is unfair to promote grants aimed solely at buyers of new properties. My interest would be in buying a property with character not a new bland building the same as others. Buying such secondhand properties often involves renovation costs extra to the purchase price. Cutting construction costs would benefit such buyers. It would assist those who are interested in restoring currently unliveable properties to liveable standards and contributing all round to more available properties. The answer is not totally in building new homes but also lies in restoring older properties to good living standards.

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