The controversial ‘Help-To-Buy’ scheme is helping drive the property market to heights not seen since the boom years.
Asking prices for newly listed homes in Dublin have risen by €32,000 in the past six months – with house price inflation on course for double-digit growth in 2017.
Nationally, prices also rose significantly – by €24,000 – according to the latest MyHome.ie property report for the second quarter of the year.
It means prices on newly listed properties nationally rose by 5pc between April and June, up 8.9pc on the year. In Dublin, prices rose by 2.8pc and are up 10.3pc year on year.
Sale-agreed times have tumbled to new lows – 3.8 months nationally and 2.7 months in Dublin.
The ‘Help-to-Buy’ scheme for first-time buyers has averaged a €15,000 rebate, the report revealed. The measure, introduced in the last budget, has proved to be extremely controversial, with concern it is inflating prices.
There are also warnings that the scheme will cost more than the €50m envisioned as buyers clamour to take advantage of it.
Across the country, there was just one county where the price of the standard three-bed semi-detached house dropped.
This was in Sligo, where prices dropped by 5pc to €122,500.
The largest increase came in Kilkenny where there was a 10pc rise to €165,000.
Chief economist at Davy Conall Mac Coille said he anticipated a surge of house purchases from first-time buyers in the coming months, with the scheme expected to be scrapped by the Government following the Budget for next year.
“The likely demise of ‘Help-to-Buy’ could lead to a rush of transactions in 2017 as first-time buyers move quickly to avail of the scheme and to a slowdown in 2018 as it is phased out,” he said.
Mr Mac Coille said that 1,679 new home owners had benefited from the scheme already – with the combined cost of all of these houses working out at €24.5m.
The economist added that the scheme had contributed to inflation in the market.
“This means that the average ‘Help-to-Buy’ cash rebate has equalled €15,000, or 5pc of a €300,000 newly built home.
“Given the 7,275 applications received so far, the initial estimate that the scheme would cost €50m may now seem conservative,” he said.
“Did ‘Help-to-Buy’ contribute to house price inflation? What evidence there is suggests it did, as the price of newly built homes is rising much faster than existing dwellings.”
Angela Keegan, managing director at MyHome.ie, said buyers were getting desperate because of the tightness of the housing supply nationwide.
“Just 1pc of Ireland’s housing stock of two million homes is currently listed for sale.
“In Dublin, where demand is greatest, fewer than 4,000 homes, or 0.85pc of the capital’s stock, is listed for sale,” she said.
“Not surprisingly, average time to sale-agreed for homes has fallen to 3.8 months nationally and just 2.7 months in Dublin.
“These are the lowest times we’ve seen since we began recording these figures in 2011.”
A new feature in the report was an analysis of the sales of homes exceeding €1m.
Last year, there were 638 such transactions, four times greater than the 160 recorded in 2011. Not surprisingly, 547 of these €1m transactions were in Dublin, with Cork recording 21, Wicklow 18 and Galway 12.
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