Thursday, 22 November 2018

Questions (18)

Niamh Smyth

Question:

18. Deputy Niamh Smyth asked the Minister for Finance the status of a review of the help- to-buy scheme; and if he will make a statement on the matter. [48423/18]

View answer

Written answers (Question to Finance)

Earlier this year, I commissioned an independent Cost Benefit Analysis (CBA) of the Help to Buy (HTB) incentive. Following a competitive tender process, Indecon International Economic Consultants were appointed to carry out this analysis. The report of the CBA was published at Budget time in the Department of Finance Report on Tax Expenditures and is available on my Department’s website.

In brief, the report finds as follows:

- Prices: While there may have been a very small increase in prices attributable to the introduction of the incentive, the primary driver of house prices remains the continued misalignment between demand and supply.

- Supply: The evidence suggests that following the introduction of the incentive there was a marked increase in supply which can be attributed in part to HTB.

- Affordability: The analysis also finds that availability of HTB has reduced the time to save for all claimants and improved the overall affordability of housing for these individuals.

- Benefit/Cost Ratio: The analysis finds a benefit-cost ratio of 1.28 indicating a moderate positive effect for the incentive but note that if the price of new HTB units was to increase due to the incentive, the net benefit would be reduced.

The incentive is due to expire at the end of next year and will be subject to decision as part of Budget 2020.