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An 11th Hour Reprieve and the Real Market Impact of Ireland’s First Home Scheme

Last week we were talking about the surge in development activity before the closure of the development levy waiver; this week, we are confident of the Housing Minister being supported in his attempts to extend this to the end of 2024. The refund on water connection charges is also a welcome relief to the residential sector. What a difference a week makes… 

In further good news for home builders, more than 4,000 individuals have successfully availed of the Government’s First Home Scheme, according to an article in The Irish Times in recent days. The initiative, designed to support first-time buyers in navigating the increasingly challenging property market, has seen a strong uptake. A collaboration between the state and a number of the pillar banks, this €400 million venture has facilitated the acquisition of over 1,500 homes since its inception, injecting more than €100 million in support for new homeowners and helping to ensure the viability of new homes development across the country.

The First Home Scheme is an important bridge for would-be first-time buyers, covering the gap between a mortgage, the buyer’s deposit, and the total purchase price of a new home. With an average purchase price of €379,000 under the scheme, approximately €67,000 or 17 percent of the home cost is estimated to be covered by the scheme on average. We know from our home builder clients across Ireland that this figure might just be the difference between making a development viable or not.

Data released this week shows that the scheme experienced a surge in applications, up 50 percent year-on-year in the three months of 2024. This is exactly the kind of trend our clients, and the wider industry, needs to see as it indicates likely sustained activity and the scheme’s future contributions, which helps home builders to deliver vital new housing. 

Most importantly, the distribution of approvals highlights both the scheme’s reach and home buyer appetite across the country, with a quarter of the homes located in Dublin, followed by 15 percent in Kildare and 14 percent in Cork. 

As investors here might be aware, the scheme was recently expanded to include renters seeking to purchase homes from landlords who are looking to exit the market or offload their investment property. 

Interestingly, among the First Home scheme’s beneficiaries, a significant number are also leveraging the Help-to-Buy initiative. This really demonstrates the importance of joined up policy making and the need for layered supports for first-time buyers in Ireland (and, arguably, all home buyers). 

Also, earlier this week KPMG published the findings of an assessment into the real market impact of this buyer initiative and it conclusively dispelled concerns about the scheme’s inflationary impact on new home prices. Notwithstanding that, the report did note the importance of ongoing vigilance in monitoring such impacts. Which we welcome.

While we are in uncertain times politically, all indications from the Housing Minister (extension of the scheme to self-build projects and tenant purchases ) are that the scheme will continue.  

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group