House prices in one development have been hiked €45,000 since the Budget

HOUSE PRICES IN one development has been hiked as much as €45,000 since the government launched its first-time buyer scheme in the Budget.

On Tuesday, Finance Minister Michael Noonan announced that the plan will provide a rebate on income tax paid over the four previous tax years up to a maximum of €20,000 on the purchase price of new homes worth up to €600,000.

Critics of said the measure, however, have said the scheme will only succeed in driving up prices.

In one development in Dublin’s commuter counties, between €17,500 and €45,000 has been added to the price of houses since the budget announcement.

As of 1.30pm on Tuesday, developer Kingscroft had properties in Thorndale, Delgany, Co Wicklow still on sale on Daft.ie for:

• €395,000 for a three-bedroom semi Category B house, 1,210 sq ft
• €575,000 for a detached five-bedroom Category A house, 1,971 sq ft.

The asking prices have since changed to:

• €427,500 for a three-bedroom Category B house, 1,210 sq ft
• €620,000 for a five-bedroom Category A, 1,971 sq ft

Earlier this summer, a three-bed semi-detached house at the same development was priced at €395,000.

On the website of Sherry Fitzgerald, who are acting as agents for the development, the lowest-priced house for Thorndale, meanwhile, was €410,000 as of Tuesday night at 8pm.

Today, those same houses are on sale for €427,400 on the Sherry Fitzgerald website.

A map of the Thorndale development.

Movement

Sherry Fitzgerald director and head of new homes Ivan Gaine said it was normal for house prices to change as different properties get snapped up.

“We’re into the last few houses of the development,” he said.

“Typically, when you draw information from Daft.ie and MyHome.ie, our own website and what not, there is a starting price, and it could be a north-east facing house which is on a smaller plot.

“I suppose given the nature of the product, you don’t list 35 houses and 35 products on a development website.

“The more recent sales were €410,000, and now we’re getting into the balance of the site.

“You see movement from season to season. The market will probably do 3-4% price growth over the course of the year. There is a seasonality.

“The houses are looked at a one-for-one basis and it absolutely looks more than it is, but that isn’t the case.

“The 5% rebate does enhance people’s ability to buy, but it doesn’t actual increase their buying capacity, their overall mortgage availability. The income multiplier is the income multiplier, and that’s the brake.

“There’s been a lot of comment about the help-to-buy scheme, but it’s one of 82 or 83 items in the Housing Plan.”

A picture from the Thorndale brochure

Struggling

In a statement, the Department of Housing, Planning, Community and Local Government said that builders and estate agents who increase prices in response to the budget scheme will affect demand.

“Help-to-buy is a direct response to a viability gap that exists at present whereby buyers are struggling to be in a position to realise their home ownership aspirations to buy at existing prices.

“It is intended to translate notional demand into real demand. It is a helping hand for people to comply with, rather than side-step, the Central Bank lending rules.

“In doing so, it will also help provide the certainty needed by providers and their investors to proceed with bringing forward the supply of new homes.

“While the wider market is in recovery at present, with prices already rising, there is a risk for builders that increasing prices in response to help-to-buy will serve only to maintain that viability gap.”

“This is clearly bad news for developers – if they want to sell homes they need buyers with actual buying power.”

The Construction Industry Federation has been contacted for comment on this story.

Written by Darragh Peter Murphy and posted on TheJournal.ie