Those availing of the Help-To-Buy scheme also tend to have smaller deposits and be younger than other new buyers, according to a research paper by two Central Bank economists.
The research is likely to add to criticism of the scheme following previous findings that many of those availing of it could have raised a deposit without it.
A recent report by the Oireachtas Parliamentary Budget Office found that a third of recipients did not need the Help-to-Buy (HTB) scheme to meet the 10pc deposit requirement to buy a home.
Under plans being examined for the Budget, the Government may expand access for renters to the scheme.
The scheme offers a tax rebate to first-time buyers, worth up to €30,000.
It was put in place to encourage more house building by developers.
Minister for Housing Darragh O’Brien has been pushing to extend and expand the scheme beyond 2025, well into the lifetime of the next government.
The Central Bank economists found that new buyers availing of the scheme typically buy more expensive homes than other first-time buyers.
People using the scheme also have smaller deposits.
In Dublin and surrounding commuter counties, people using the scheme have around €19,000 less in a deposit than first-time buyers not using the scheme.
And they are buying dearer homes.
Today’s News in 90 Seconds – September 25th
Help-to-Buy supported purchases are around €62,800 more expensive than other first-time buyer purchases across the State.
Outside of Dublin and commuter counties, home purchases supported by the scheme are around €84,000 more expensive.
It is not that they are paying more per square meter. Instead, “this is explained by larger average home size” of Help-to-Buy properties. These tend to be newly built, and typically in suburban locations, the economists said.
The study found first-time buyers availing of the HTB scheme are typically higher earners than other first-time buyers who do not use the scheme.
The economists found that the income gap is around €15,500.
Income gaps are even higher outside of Dublin and the commuter belt.
People approved for the HTB scheme tend to be one year younger than other first-time buyers.
Within Dublin and its nearby commuter counties, HTB users typically post smaller deposits as compared to other first-time buyers, the research found.
“This suggests that, while HTB recipients are on average higher earners than other FTBs, the scheme might have allowed relatively younger prospective buyers to access the housing market, especially in Dublin and surrounding counties,” the study said.
However, the lower deposit typically posted by HTB users might also be driven by one of the scheme qualification criteria, in particular the rule that the total deposit must not exceeding 30pc of the house price, according to ‘Who uses the Help-To-Buy scheme?’, written by economists Emil Bandoni and Anuj Pratap Singh.
They examined loan-level data to identify borrowers and analyse their characteristics in comparison with other first-time borrowers.
Introduced in mid-2016, the HTB scheme offers a refund of the income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland during the four years before apply for it.
The scheme support around a third of all first-time buyer mortgages between 2019 and 2023, with around 38,300 claims.
The study found that the share of buyers using the scheme in Dublin has fallen in recent years. This is likely due to the fact that there are fewer homes being built under the €500,000 cap for the scheme.
Minister O’Brien is understood to be pushing for the cap to be lifted.
The authors said: “Our estimates show that Help-to-Buy users are typically one year younger, higher income borrowers who purchase larger, more expensive homes.
“The average house price differential is likely connected to the nature of Help-to-Buy properties, which are newly built, larger, and with higher energy ratings.”
