Finance Minister Michael Noonan has suggested that property prices could be bottoming out.
Speaking following the publication of the Finance Bill yesterday, Mr Noonan said he took heart from reports of an increased interest in the property market.
He also revealed that 270,000 homeowners are set to see their mortgage interest payments fall in the coming months due to measures implemented in last December’s Budget.
First-time buyers who bought during the boom and those who buy homes this year will benefit. Mortgage interest relief will be raised to 30% for first-time buyers who purchased between 2004 and 2008. This is expected to benefit 270,000 purchasers.
First-time buyers who make the leap this year will still be entitled to 25% in mortgage interest relief, with an extension of that measure.
Revealing the Finance Bill as part of this year’s budget measures, Mr Noonan said: “What we’re trying to do in the budget is incentivise people to purchase in 2012.
“That seems to me like the kind of incentive that might work, especially if you’re coming to the bottom of the property market. I don’t know whether we’re at the bottom or not.
“If you look at actuarial figures, the replacement cost of houses now is either equal to or slightly higher than the market price. There’s a fundamental rule. If the bricks and mortar and building costs of a house is now higher than the actual price of the house on the market, things are bottoming out.”
Mortgage holders will qualify for the increased rate of relief if they made their first mortgage interest payment in the period 2004 to 2008 or if they drew down their mortgage in the period 2004 to 2008.
Mr Noonan also said he was pleased with
“The estate agents say there’s interest and people in other professions say the market price of houses is now about or slightly lower than the replacement cost of houses, in Dublin in particular,” said Mr Noonan.
The minister said there had been delays on updating computer systems to process mortgage interest relief payments. Homeowners would receive retrospective payments though over the coming weeks as systems were fixed, he said.
It is expected homeowners may have to wait until April to get the benefit of the extra mortgage interest relief.