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Government grants

First-time home buyers could get Government grants under new scheme

First-time buyers could receive Government grants to help them afford new homes, it has emerged.

It is believed the initiative, similar to the one which was scrapped in 2002, could be brought in by Environment Minister Alan Kelly.

It will see local authorities providing cash grants to buyers who can't afford homes in counties Dublin, Cork, Limerick and Galway.

The Irish Independent reports that a number of Labour Party figures are backing the introduction of the scheme.

It will target couples living in urban areas who are struggling to meet the strict new mortgage rules introduced in recent months.

Under the previous grant scheme, applicants were awarded up to €3,800 towards their first home.

It is believed the new proposals will not be brought in before this year's budget. Instead the scheme could feature in the Labour Party's election manifesto.

Spokesman for the Association of Expert Mortgage Advisors, Ken Murray, called for "joined up thinking" on the grant proposals.

Mr Murray said: "While we definitely believe that plans to assist struggling First Time Buyers (FTBs) are needed and so we welcome the Governments proposals, we would stop short at saying that this will be the panacea the market needs.

"There absolutely needs to be joined up thinking on this. We cannot have the Government introducing measures that contradict what the Central Bank (CB) or indeed individual banks are trying to do.

"Any proposed grant or assistance must be a fair measure that will assist FTBs in a manner that compliments the new Central Bank rules. Certainly a reintroduction of tax relief of some form would have to be a beneficial measure particularly when interest rates, as we know, are so high comparative to our neighbours in Europe.

"But again this requires engagement with the CB and the lending banks as to how this benefit could be incorporated into underwriting models to help assist first time buyers."

The news comes as it emerged house prices are growing 15 times faster here than the average EU.

Official figures show Irish house prices were 16.1% higher in the last three months of 2014 than in the same quarter a year earlier.

Across the EU last year house prices rose by 2.6% while in the euro zone the increase was just 1.1%, figures from Eurostat, the European Union’s official statistics body reveal.

These estimates which clearly show that the house price rises here are way ahead of the rest of the EU will be a cause of alarm for the Government and those trying to get on the housing ladder.

On the other hand the disclosure will be welcomed by the hundreds of thousands of homeowners in negative equity.

While there was some slowdown in the last few months as new Central Bank lending rules kicked in the figures show that prices continued to rise in the last quarter of 2014 compared with the three months between June and September.

In a statement, Eurostat said: “The year-on-year increase in Ireland is the largest among the EU member states for this period, and is followed by Malta (11.0%), Sweden (10.4%), Estonia (10.1%) and the UK (10.0%).

The average house price increase in the EU for the same period was 2.6% in the EU, and 1.1% in the euro area.

“The largest falls in the same period were seen in Slovenia (-4.4%), Cyprus (3.3%), Latvia (3.2%) and Italy (2.9%).”

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