A Cabinet Minister says it is worth risking higher property prices in order to help out first-time buyers.
The financial package announced in the budget yesterday has prompted concerns that developers will put up the prices of new builds in response, rather than increasing housing supply.
The new help to buy scheme comes in the form of a rebate of income tax paid over the previous four years, worth up to 5% of a house's purchase cost.
The package will provide buyers with a maximum refund of €20,000 for newly-built properties valued at up to €400,000.
Those who purchase homes costing between €400,000 and €600,000 will also be entitled to this rate.
Under the rules, applicants must take out mortgages of at least 80% of the house price.
But the scheme, which will run until the end of 2019, does not cover second-hand or buy-to-let properties.
Social Protection Minister Leo Varadkar told the Pat Kenny Show here on Newstalk the benefit of the scheme will outweigh any problem.
"It is a risk - it's a risk if supply doesn't increase, but sometimes you have to take risks to try and change the environment and change the landscape that is out there.
"And we believe it's a risk that will pay off because it'll generate much more supply."