Abbey, a property developer, has high hopes for the Irish housing market.
They are seeing huge gains as the house prices keep increasing. They are especially reaping the benefits from the Help-to-Buy scheme. That’s why they are against the review of the scheme.
The intention of the Help-to-Buy scheme was to encourage first-time buyers and to speed up new supply of houses. It can give first-time buyers up to €20,000 in tax rebates. The scheme, instead, has apparently increased home values than raise supply of new homes. This has raised concern for the Minister for Housing, Eoghan Murphy, which brought up the review of the scheme.
The Central Statistics Office published on Tuesday that the Irish housing prices went up by 11.9 percent in May from the previous 12 months, driven by a 12.8 percent increase outside of Dublin.
Charles Gallagher, executive chairman of Abbey plc., expresses his disappointment and he believes the Help-to-Buy scheme has done what it was supposed to do.
It is clear that Abbey has had a visible gain in result of this program so their view is potentially biased. The Dublin-listed company has seen a €2 million pre-tax profit increase from the previous year. The stock price beat the estimate by 9 percent. Their housebuilding turnover came to €196.5 million and that’s just one sector.
Charles Gallagher commented on how Ireland is in a strong economic recovery with mortgage financing improving and the Help-to-Buy scheme has been helpful, especially to 30 km outside of Dublin.
Gallagher claiming that this scheme has made projects in Co Kildare and Co Laois possible. He says the program just needs more time to increase supply and that developers are in process of starting new projects. This makes the Help-to-Buy scheme a work in process and not an immediate response like the public wants.
We see a lot of arguments against whether or not the Help-to-Buy scheme is doing what it was intended to do. A property developer company may have a bias because they seek to gain from the increase of house prices. With suggestions of the scheme getting scrapped, it may result in either helping or hurting the current housing market.
In reference to Abbey aims to more than double Irish home sales as prices rise by Joe Brennan in the Irish Times on 11 July 2017.