Will house prices go up? Officials warn that Government’s “affordable” home plan will increase prices

DUBLIN: Officials express concern over new affordable housing policy announced by Fianna Fáil Housing Minister Darragh O’Brien. The government and the opposition ignored the warnings from the officials that the shared equity “affordable” housing scheme would increase housing prices.

The government had presented a €75 million scheme in connection with the new affordable housing policy at the final cabinet meeting in 2020. The plan was to implement it this year.

The government put forward such a scheme because they believed that the state taking up to 30% equity in a home with a first-time buyer will help people get on the property ladder. The government also thought that if the developers knew that such a scheme was better, they would make home purchases more expensive, due to the involvement of the state.

With all this in mind, government officials and the opposition agreed to go ahead with the scheme despite three warnings from officials that the project would not have a beneficial outcome.

Another concern about the plan is that in the event of a property breakdown, the Irish taxpayer will be liable for the money lost.

“In the context of an affordable scheme, there is little evidence to suggest an absence of mortgage finance. If there is a lack of supply it is not because of a lack of ‘effective demand’. The property industry want an equity scheme because it will increase prices,” said Robert Watt, the most senior official in the Department of Public Expenditure and Reform (DPER).

“What we have seen to date, the proposed shared equity scheme does not appear to include any eligibility parameters, meaning the provision may not be targeted to those most in need,” DPER official, Niamh Duff said.

Sinn Féin housing spokesman Eoin Ó Broin said the emails were evidence that the initiative would only increase house prices. “The information contained in the FoI files indicate that the Government was aware that Minister O’Brien’s developer-led shared equity affordable housing plan would increase house prices,” he said.

“This is a fantasy. Shared equity loans do not make homes more affordable. They simply saddle working people with more debt. This scheme should be scrapped. Minister O’Brien needs to go back to the drawing board and introduce proposals that make homes cheaper,”  Mr. Ó Broin added.