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Government’s shared equity scheme risks driving up house prices

The Central Bank has raised concerns about the Government’s new shared equity loan scheme, suggesting it could saddle potential participants with big debts while inflating house prices generally.

The scheme involves the State paying for up to 30% of the cost of new homes in return for a stake in the property.

A key concern raised is whether such an initiative would be inflationary, noting that the scheme would operate by increasing the purchasing power of households but that the supply response to increasing house prices has been sluggish.

The bank suggested the scheme would not fall under any of the current regulatory frameworks with potential implications for the protections afforded to consumers.

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