UNCERTAINTY over the future of the Government’s help-to-buy scheme could spark a further spike in house prices in Cork, potentially leading to panic buying by people fearful of losing the grant.
The warning was issued as the Government announced a review of the help-to-buy scheme less than a year after it was introduced.
Prices in Cork city have soared since the introduction of the grant, with asking prices hitting €256,201 at the end of the second quarter this year - up by more than €20,000 in a year.
Prices in Cork county have also risen by by more than €20,000, hitting an average of €206,686.
CSO data shows that most areas in Cork are enduring significant increases, with the city centre and the commuter belt among the worst hit.
Ballincollig, which has an average price of €286,000, Carrigaline (€252,000) and the south side of Cork city (€269,000) are among the areas which surpass the national average of €249,000.
The help-to-buy scheme, which encouraged more first time buyers into the market, and a lack of supply are being blamed for the increases.
Cork South Central TD Michael McGrath, Fianna Fáil's spokesperson on finance, criticised the policies introduced by former housing minister Simon Coveney.
He said, "It is undoubtedly the case that the help-to-buy scheme boosted demand at a time when supply is the real issue that we are facing. Individual buyers may have benefitted from the scheme but it does seem that the scheme has contributed to the increased prices."
Mr McGrath noted that there are 'other factors' at play in the market, though.
He said, "Just over 2% of all transactions relate to new homes, so there are clearly some issues in the second-hand market, too."
The Fianna Fáil TD raised concerns over changes to the scheme.
"The Government has strongly hinted that the scheme will be revised or abandoned and this is causing somewhat of a panic among first-time buyers who are now rushing to take advantage of the scheme before it is gone," he said.
"New house prices could well increase even further while this uncertainty surrounds the scheme."
Mr McGrath warned that any change will need to be flagged well in advance, adding that it needs to be 'evidence-based.'
He continued, "The lack of supply is undoubtedly the biggest issue in the market at present and, from our perspective, the government has not done enough to combat this. I am talking about the cost of building, VAT and levies and the lack of available finance and the lack of available zoned land.
"The fact that the government is carrying out a three-month review on a plan which is just eleven months old shows a complete lack of confidence in the Rebuilding Ireland plan. It did not have the impact in the market that had been hoped for."
A spokesperson for the Department of Housing confirmed that a review of the policy is currently underway with housing minister Eoghan Murphy due to 'considering the finds of this review in due course.'
It is expected that the review could be complete by the end of August.