Housing Minister Darragh O’Brien’s dream project ‘up to 30% equity loan scheme’ not likely to be implemented
DUBLIN: Criticisms such as rising house prices are likely to undermine the government’s new housing loan scheme. The dream project of housing minister Darragh O’Brien caused controversy after the central bank voiced concerns that it could lead to a rise in prices. There is a lot of pressure on the government to cancel the project.
The central bank’s warning comes amid criticisms from the ESRI, the Institute of Professional Auctioneers and Valuers, and senior civil servants. In a letter to members of the Oireachtas housing committee, the central bank warned that the proposed housing project would lead to a rise in housing prices. In the event of widespread concerns and criticism, there are indications that other measures may be considered to replace the shared equity scheme.
The plan proposal, which was brought to the cabinet before Christmas, offers up to 30% equity loans for new homes below €400,000. Vasileios Madouros, the Central Bank’s director of financial stability, said in a letter that construction of new housing units has been “below its long-term average for about a decade”.
“Overall, taking a broader housing market perspective, the proposed scheme — in isolation — is likely to have a limited impact on the ultimate supply-side problem in the Irish housing market,” he said. Mr. Madouros also advised “to be mindful of the potential implications of increased demand for house purchases in a supply-constrained market”.
There are a number of structural factors that hinder the supply of housing, such as labour skill shortages in the construction sector, tighter land-use regulation, and land hoarding. All this creates a high demand for homes. The increase could put pressure on home prices, the letter said.
Following the Central Bank letter, Sinn Féin housing spokesperson Eoin Broin asked housing minister O’Brien to remove the proposed shared equity loan scheme from the Affordable Housing Bill.
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