HOUSING MINISTER DARRAGH O’Brien has said he will push ahead with a shared equity scheme despite concerns raised by the ESRI at a housing Committee yesterday.
The think-tank yesterday gave its feedback on O’Brien’s Affordable Housing Bill and said that a shared equity loan scheme will be a benefit “in theory” as it would facilitate borrowing for households currently constrained by the amount needed to finance a purchase.
A shared equity scheme, which involves the State paying for up to 30% of the cost of new houses in return for a stake, is intended to drive home ownership.
However, the ESRI researchers said yesterday that the current housing situation in Ireland is “so constrained” that increasing purchasing power for households through a loosening of credit constraints “will very likely lead to higher house prices”.
“Such rises in house prices are likely to exacerbate affordability problems down the line.
“While they would lower credit constraints and allow buyers to finance home purchases who would otherwise be locked out, the ESRI conclude that “on balance, with the current supply shortages it is likely these benefits will be outweighed by inflationary pressures.”
Speaking to RTÉ’s Morning Ireland, O’Brien said the shared-equity scheme was only part of the Bill and said that in addition the Government’s Serviced Sites Fund of €310 million will allow the State to deliver affordable homes.
“The measures in relation to shared equity [is that] when they’re targeted at the right people have a great deal of merit and they do, so why would I not proceed with something like that?
“The other big piece [in the Bill] is around the Serviced Sites Fund…that we can develop affordable homes on State-owned land,” said O’Brien.
Speaking after yesterday’s committee, Labour Senator Rebecca Moynihan called on O’Brien to clarify what further control measures will be put in place to ensure that the UK experience of people using the shared equity scheme isn’t replicated in Ireland.
Moynihan said “government members of the committee seem to be relying on selective figures from the UK to boost their argument about an increase in supply, while attacking the ESRI who presented a balanced analysis of the likely impact of the shared equity scheme.
“The Affordable Housing Bill in general is welcome but we have independent analysis from the ESRI that without significant increase in supply the shared equity part of the scheme is likely to lead to an increase in prices overall.”
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