Yes you’re putting more money in first time buyers pockets, but will that not just result in further inflation in property prices?
The issues with housing is basic supply and demand. Adding more money into the system isn’t necessarily going to result in increased supply.
That money could be used by government to fast track house construction. The government could buy vacant sites with planning and fast track house building, invoke legislation to build emergency modular houses, etc.
Injecting more money into the system will only make developers richer
The house’s pictured cost upward of €520,000, when I checked it a year ago.
We simply don’t learn, do we? Pumping more money into a market that is starved of supply will only inflate the prices.
Nice idea, but it only applies to new builds. Where in the country can you find affordable NEW houses?
This scheme does nothing for single people in the 30k to 50k bracket.
This is a potential scenario I posted on another thread the other day, with this kind of state intervention per unit it really is baffling why they don’t just build social, cost rental and affordable housing.
>*Lets use an example of a new build apartment in Dublin that cost €450k to build. The government are already looking at subsidizing development to bridge the viability gap, so lets say it is sold for €350k to a FTB and the government subsidizes the other €100k.*
>
>*FTB avails of the HTB scheme at the maximum level €30k so they need a mortgage of €320k.*
>
>*They have a combined income of €70k so can borrow €245k leaving a shortfall of €75k.*
>
>*The governments shared equity scheme covers the remaining €75k taking a roughly 22% equity in the home which will need to be paid at some point.*
>
>*In this scenario the government are tying up €205k to get a FTB into their home instead of actually building, social, affordable and cost rental housing.*
Don’t all these schemes just push the prices higher?
local authorities looking at buying places for social housing right now: “well I guess we’ll just have to increase taxpayer backed spending in order to outbid these first time buyers”
Developers rubbing their hands with glee
Is it like the last time where its only available to super rich people buying their first house straight from the plans without looking at it?
Shared equity isn’t aimed at solving the housing crisis, it is aimed only at solving the political issue in the short term even if this makes the problem worse in the medium to long term.
Neither FF, FG, or Green voters have much interest in the value of their main asset, their home, decreasing in value. Increasing the supply of homes beyond demand would do this. The only real question is how quickly it does it – but even a slow decline in house values in antithetical to the interests of their mostly home owning voter base.
This is a consequence of how dysfunctional our housing market has been. In a functional market you would purchase a home confident that it would be roughly the same price ten years hence. In our market you purchase a home with the promise that it will have increased in value in that time far beyond both inflation and wage growth. Many people (and the Minister himself with a three bed terraced house is likely in this camp) purchased the famous “starter home” to “get on the ladder” and sell it for a larger property. Levereging that asset growth is thus important for a lot of people, who purely out of demographics are more likely to support FF/FG. If you take that away you take away their planed route to a home large enough to support their growing families.
The problem is that this kind of growth in housing assets is precisely what has locked younger people (which increasingly means anyone under 35-40) out of the housing market entirely. Many of these people are natural FF/FG voters, but they are turning away as Government fail to deliver what is a basic human need for a home.
Government need to square the circle. They cannot just do the economically rational thing and increase supply precipitously as this would harm their political interests. They equally cannot now continue to ignore the problem.
The solution of “shared equity” is somewhat genius at doing this. It is pure nonsense economically as it is a demand led scheme in an environment of immense damend over supply and so can only drive price growth up. The “price caps” in particular areas will mean that delivery of homes incentivised by it in constrained markets won’t be of 3/4 bed houses, but will drive up towards the cap the price of the very type of “starter homes” that cannot fall in value for FF and FG voters – 2 up and 2 down terraces, duplexes, apartments. This will house people for sure, and changing family structures and increased urbanisation do mean that we need more of this type of housing. However, shared equity means that it will not be the market working to provide this type of housing to those who prefer it. Instead it will manipulate the market to provide this type of housing and present it as the only option for buyers with no other choices. Many will be “bag holders”, hoping that the asset price continues increasing so that they can move on when their families become too large. The price caps in shared equity mean that this will not actually happen.
That doesn’t matter though, as by the time this occurs the current crop of politicians will have moved on and the dynamics are too complex anyway for them to take much of the blame. More importantly, these people are now home owners. Their interests are now aligned, however perversely, with the interests of those who want to see residential house prices increase.
The real cynical genius of it though is in how it will tie the hands of any incoming Government. If Government has a significant stake through shared-equity in any significant portion of the residential housing market then that places a government who want to increase supply in a bind. If you go about your plan to deliver a significant number of new homes, you will drive down the value of those residential assets that you now have a stake in.
I wouldn’t like to be the Finance minister who has to explain that such a policy will significantly diminish the asset side of the Government’s balance sheet. A shared equity scheme means that it is not just the interests of a cadre of property owning voters that a new government (who may not care as much about them) needs to consider when increasing supply, or doing anything that will drive house prices down. They now must also consider the effect on the state’s finances in a way that can be represented easily on a spreadsheet.
This just feels like another way of giving more money to developers rather than actually helping the issue at hand- extortionate prices and not enough supply. What would be the best solution to the housing crisis because I dont think this is it at all
In the area where i live, what’s needed is a “second home scheme” whereby second home ownership is discouraged. Houses lying empty six or eight months of the year, yet people who were born and who work in the area can’t find a place to rent at any price, and can’t afford to get on the mortgage ladder because prices have been driven up by the wealthy second home out-of-towners.
It’s all very well encouraging wealthy holidaymakers to the area, but those same holiday makers want to eat in restaurants, drink in bars, and use other local amenities which necessarily have to be run and operated by local workers. But where are the local workers to live if they don’t want to still be living with parents when they’re retirement age?
All these schemes are aimed at helping first time buyers buy unaffordable houses. The government don’t want to bring down house prices so that people could naturally buy a house without state money being handed to private developers
The limits on the counties is nowhere near what new builds are going for! 350k max for a new build in kildare, where?? Even offaly the tullamore new builds were in the 300s and the cap here is 275k or something
Easier than just building more housing, easier than just having strategies for growing our towns and cities as our population grows. Easier than admitting the housing strategy is fucked again. Also I have looked at the prices of a lot of new builds a lot ones in dublin and commuting areas, guess what they are way out of the league of first time buyers. Especially when competing against the state and property companies.
Cheapest new build in Cork is 400k. And I mean cheapest (3bed terrace)
It’ll be able to buy 4 houses so, maybe 5 in the sticks.
This is a stimulus for new housing stock masqueraded as first time buyer crap. Unless the government was to grow a pair of balls and build rent to buy houses (this is effectively what social housing used to be) it’s just to get stock up with fancy pro vote language.
They really have no intention of trying something different do they? More of the same, more money onto the fire.
Everything we do is on the demand side of the problem, start feckin’ building yourselves
Essentially the HAP scheme equivalent of private home/property purchasing. Another renamed and rebranded equity scheme that just gives taxpayer money to developers without any intent to lower prices.
‘Yo dawg, I heard you liked mortgages, so we’re gonna put a mortgage on your mortgage’.
Fuck this government
We should be using this money to build affordable rental. The money needs to stay in the system and be used to build more apartments with the rental money then used to improve the housing stock and build even more affordable rental apartments. This is just a once-off giveaway and completely short-term-ist.
Those developers will be so glad of this dig out in such tough times for them. Jesus – who is stupid enough to not see this for what it is. Make a note of the commenters who are in favor of this and add them to the idiot/liar list.
If governments goal was to help people you would be hearing about 20 year leases. Like most other European countries. You won’t though. Why would that be?
Why do they call all this things schemes..? Is it because they are just robbing Peter to pay Paul or what
27 comments
I really don’t know about this.
Yes you’re putting more money in first time buyers pockets, but will that not just result in further inflation in property prices?
The issues with housing is basic supply and demand. Adding more money into the system isn’t necessarily going to result in increased supply.
That money could be used by government to fast track house construction. The government could buy vacant sites with planning and fast track house building, invoke legislation to build emergency modular houses, etc.
Injecting more money into the system will only make developers richer
The house’s pictured cost upward of €520,000, when I checked it a year ago.
We simply don’t learn, do we? Pumping more money into a market that is starved of supply will only inflate the prices.
Nice idea, but it only applies to new builds. Where in the country can you find affordable NEW houses?
This scheme does nothing for single people in the 30k to 50k bracket.
This is a potential scenario I posted on another thread the other day, with this kind of state intervention per unit it really is baffling why they don’t just build social, cost rental and affordable housing.
>*Lets use an example of a new build apartment in Dublin that cost €450k to build. The government are already looking at subsidizing development to bridge the viability gap, so lets say it is sold for €350k to a FTB and the government subsidizes the other €100k.*
>
>*FTB avails of the HTB scheme at the maximum level €30k so they need a mortgage of €320k.*
>
>*They have a combined income of €70k so can borrow €245k leaving a shortfall of €75k.*
>
>*The governments shared equity scheme covers the remaining €75k taking a roughly 22% equity in the home which will need to be paid at some point.*
>
>*In this scenario the government are tying up €205k to get a FTB into their home instead of actually building, social, affordable and cost rental housing.*
Don’t all these schemes just push the prices higher?
local authorities looking at buying places for social housing right now: “well I guess we’ll just have to increase taxpayer backed spending in order to outbid these first time buyers”
Developers rubbing their hands with glee
Is it like the last time where its only available to super rich people buying their first house straight from the plans without looking at it?
Shared equity isn’t aimed at solving the housing crisis, it is aimed only at solving the political issue in the short term even if this makes the problem worse in the medium to long term.
Neither FF, FG, or Green voters have much interest in the value of their main asset, their home, decreasing in value. Increasing the supply of homes beyond demand would do this. The only real question is how quickly it does it – but even a slow decline in house values in antithetical to the interests of their mostly home owning voter base.
This is a consequence of how dysfunctional our housing market has been. In a functional market you would purchase a home confident that it would be roughly the same price ten years hence. In our market you purchase a home with the promise that it will have increased in value in that time far beyond both inflation and wage growth. Many people (and the Minister himself with a three bed terraced house is likely in this camp) purchased the famous “starter home” to “get on the ladder” and sell it for a larger property. Levereging that asset growth is thus important for a lot of people, who purely out of demographics are more likely to support FF/FG. If you take that away you take away their planed route to a home large enough to support their growing families.
The problem is that this kind of growth in housing assets is precisely what has locked younger people (which increasingly means anyone under 35-40) out of the housing market entirely. Many of these people are natural FF/FG voters, but they are turning away as Government fail to deliver what is a basic human need for a home.
Government need to square the circle. They cannot just do the economically rational thing and increase supply precipitously as this would harm their political interests. They equally cannot now continue to ignore the problem.
The solution of “shared equity” is somewhat genius at doing this. It is pure nonsense economically as it is a demand led scheme in an environment of immense damend over supply and so can only drive price growth up. The “price caps” in particular areas will mean that delivery of homes incentivised by it in constrained markets won’t be of 3/4 bed houses, but will drive up towards the cap the price of the very type of “starter homes” that cannot fall in value for FF and FG voters – 2 up and 2 down terraces, duplexes, apartments. This will house people for sure, and changing family structures and increased urbanisation do mean that we need more of this type of housing. However, shared equity means that it will not be the market working to provide this type of housing to those who prefer it. Instead it will manipulate the market to provide this type of housing and present it as the only option for buyers with no other choices. Many will be “bag holders”, hoping that the asset price continues increasing so that they can move on when their families become too large. The price caps in shared equity mean that this will not actually happen.
That doesn’t matter though, as by the time this occurs the current crop of politicians will have moved on and the dynamics are too complex anyway for them to take much of the blame. More importantly, these people are now home owners. Their interests are now aligned, however perversely, with the interests of those who want to see residential house prices increase.
The real cynical genius of it though is in how it will tie the hands of any incoming Government. If Government has a significant stake through shared-equity in any significant portion of the residential housing market then that places a government who want to increase supply in a bind. If you go about your plan to deliver a significant number of new homes, you will drive down the value of those residential assets that you now have a stake in.
I wouldn’t like to be the Finance minister who has to explain that such a policy will significantly diminish the asset side of the Government’s balance sheet. A shared equity scheme means that it is not just the interests of a cadre of property owning voters that a new government (who may not care as much about them) needs to consider when increasing supply, or doing anything that will drive house prices down. They now must also consider the effect on the state’s finances in a way that can be represented easily on a spreadsheet.
This just feels like another way of giving more money to developers rather than actually helping the issue at hand- extortionate prices and not enough supply. What would be the best solution to the housing crisis because I dont think this is it at all
In the area where i live, what’s needed is a “second home scheme” whereby second home ownership is discouraged. Houses lying empty six or eight months of the year, yet people who were born and who work in the area can’t find a place to rent at any price, and can’t afford to get on the mortgage ladder because prices have been driven up by the wealthy second home out-of-towners.
It’s all very well encouraging wealthy holidaymakers to the area, but those same holiday makers want to eat in restaurants, drink in bars, and use other local amenities which necessarily have to be run and operated by local workers. But where are the local workers to live if they don’t want to still be living with parents when they’re retirement age?
All these schemes are aimed at helping first time buyers buy unaffordable houses. The government don’t want to bring down house prices so that people could naturally buy a house without state money being handed to private developers
The limits on the counties is nowhere near what new builds are going for! 350k max for a new build in kildare, where?? Even offaly the tullamore new builds were in the 300s and the cap here is 275k or something
Easier than just building more housing, easier than just having strategies for growing our towns and cities as our population grows. Easier than admitting the housing strategy is fucked again. Also I have looked at the prices of a lot of new builds a lot ones in dublin and commuting areas, guess what they are way out of the league of first time buyers. Especially when competing against the state and property companies.
Cheapest new build in Cork is 400k. And I mean cheapest (3bed terrace)
It’ll be able to buy 4 houses so, maybe 5 in the sticks.
This is a stimulus for new housing stock masqueraded as first time buyer crap. Unless the government was to grow a pair of balls and build rent to buy houses (this is effectively what social housing used to be) it’s just to get stock up with fancy pro vote language.
They really have no intention of trying something different do they? More of the same, more money onto the fire.
Everything we do is on the demand side of the problem, start feckin’ building yourselves
Essentially the HAP scheme equivalent of private home/property purchasing. Another renamed and rebranded equity scheme that just gives taxpayer money to developers without any intent to lower prices.
‘Yo dawg, I heard you liked mortgages, so we’re gonna put a mortgage on your mortgage’.
Fuck this government
We should be using this money to build affordable rental. The money needs to stay in the system and be used to build more apartments with the rental money then used to improve the housing stock and build even more affordable rental apartments. This is just a once-off giveaway and completely short-term-ist.
Those developers will be so glad of this dig out in such tough times for them. Jesus – who is stupid enough to not see this for what it is. Make a note of the commenters who are in favor of this and add them to the idiot/liar list.
If governments goal was to help people you would be hearing about 20 year leases. Like most other European countries. You won’t though. Why would that be?
Why do they call all this things schemes..? Is it because they are just robbing Peter to pay Paul or what