As reported it's not a good idea.
The best initiative would be to significantly reduce the government's tax take on new houses.
The second best would be to give a grant to anyone who buys a newly built house.
Giving first time buyers grants to buy second hand houses achieves nothing.
Brendan
I disagree for the reason that any scheme that tells the seller how the buyer is fixed incentive-wise just means the price goes up.
This happened in 1980 when Government brought in the FTB grant of 1,000 quid:
http://www.irishstatutebook.ie/eli/1980/si/296/made/en/print Signed on 25th Sept 1980, a Thursday...
I viewed a house in Mulhuddart for a couple on a Wednesday, and again on Saturday: the grant was announced Friday.............
The same applies for all the SEAI grants: e.g.: EWI project 16,000 without grant, 21,000 with 5,000 grant, same price to home owner, waste of tax payers money.
Reducing the tax on houses will have zero effect as its whatever the market will bear.
I have a very limited understanding of how house prices are arrived at but one model I have seen with a builder is based on buyers ability to borrow/repay.
His model has a number of different scenarios but one is based on a % of borrowers income: e.g. say 35% of after tax income
so if the monthly after tax income is 1,000, they can set aside 350 for the mortgage.
Then you look at industrial and other wages........
So assuming certain interest rates and a loan duration, it is possible to derive a capital sum.
When I first came across this sort of modelling, banks were doing 25 year mortgages.
During the booms, as the term went out to 30 and then eventually 40, [as well as the brokers completing applications based on renting the 4th room in a 3 bed,]
the builder just kept increasing the prices as per the above ability to borrow/repay model.
Ps: Joe-90, I was writing my longer version of your succinct point while you posted!