The controversial 'Help-to-Buy' scheme opens for applications online today, as new reports show house prices rose by an average of 8% last year nationwide.
The scheme will give first time buyers of new homes 5% back on the price of their property.
In two separate reports released today show increases in house prices across the country last year. According to Daft.ie, prices around the country rose by 8% - however a separate survey from MyHome.ie puts the annual rise at 5.5%.
Ronan Lyons, author of the Daft report, highlighted the sharp increases in the cost of a home in the cities outside Dublin during 2016.
"The average price in Cork now is just under €250,000 - that's up 9.2% on a year ago", he said. "In Galway, the average price is €252,000 - that's up 13% on the year previously."
Mr Lyons put the average price of a house in Limerick at €165,000 and in €155,000 in Waterford.
In the report from MyHome.ie, price increases of 8% or up are predicted for 2017, warning that the combined impact of the Help-to-Buy scheme and looser lending rules means that double-digit house price inflation is a distinct possibility in 2017.
The author of the report, Conall MacCoille, Chief Economist at Davy, said robust jobs growth and the lack of supply, especially in Dublin, were already likely to deliver substantial house price gains this year. But he said public policy on two fronts will help to further stimulate house price inflation in 2017.
The Managing Director of MyHome.ie Angela Keegan said the number of properties listed for sale fell to a fresh low in the last quarter of 2016.
“In Q4 2016 there were just 20,875 properties listed for sale on the MyHome website – down 7.7% on last year", she said. "This means that just 1% of the Irish housing stock is currently listed for sale. The lack of liquidity is particularly acute in Dublin where there are just 3,619 properties listed for sale. This is down 20% on last year and means just 0.7% of Dublin’s housing stock of 535,000 properties is currently listed for sale."
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.
The government came under pressure before Christmas to scrap the scheme, with the Central Bank concerned that the scheme could encourage people to borrow more than they actually need in order to qualify for the rebate.
The scheme was amended, with the ‘loan to value’ ratio being reduced from 80% to 70%, in an effort to allow more people to avail of the measure.
Last year, Minister for Social Protection Leo Varadkartold 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.
Leo Varadkar Fianna Fail previously labelled the scheme a “Mansion Grant” and called for the maximum value to be set at €400,000.
The full report from Daft can be read here. The full MyHome.ie report can be read here.
