Capping house prices in Galway at €400,000 under the new Affordable Housing Scheme is “an insult” to those struggling to buy a home.
This is the view of People Before Profit Galway representative Adrian Curran, who has slammed the Government’s new scheme as “‘completely unrealistic”. He went on to say that house prices are likely to increase under the new scheme, rather than drop.
The scheme, announced recently by Fianna Fáil Minister for Housing Darragh O’Brien, will involve a shared equity scheme, where the Government will offer an equity mortgage in return for a stake in the property.
However, this has been widely criticised by independent bodies for its potential to increase property prices, especially as the scheme will allow for private sector developers to avail of, and compete with, Local Authorities and approved housing bodies for the Affordable Purchase Scheme funding.
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Fears that houses will be capped at unaffordable prices have also been confirmed by the equally controversial Land Development Agency Bill, which will allow the Minister for Housing to specify an affordability requirement for the delivery of affordable homes for sale or rent on public lands. However the LDA defines ‘affordable’ as ‘below the prevailing market price’. As a result, the scheme sets a cap of €400,000 for an “affordable” house in Galway and €450,000 in Dublin.
“With these prices, the vast majority of people will still be priced out of the market,” said Mr Curren. “Furthermore, the scheme will only apply to 6,000 homes nationally over three years which, given the demand for housing, is an absurdly low amount.”
Mr Curren is also concerned that the State subsidy will lsee house prices increase. He noted that when a similar scheme was introduced in London, it led directly to a six per cent increase in house prices. The Government claims this scheme will make housing more affordable but it has been proven elsewhere that the opposite is the case.”
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People Before Profit Galway representative Adrian Curran.
PBP Galway said the Government should use public land to develop social and affordable housing at cost price through a State-owned construction company. Such a company, Mr Curran said, would reduce the costs of building houses while also providing employment.
He said there are a number of areas in Galway city, including sites on Sandy Road and Nuns Island, which have already been earmarked for development, which would be suitable for the construction of social and affordable housing.
“We need urgent and ambitious action from the Government to provide proper funding and resources to develop social and affordable housing in the city,” said Mr Curran. “The scheme announced last week does not address the crisis in a serious way and will not help those most in need.”
