Construction plan won’t lead to property bubble – Noonan

Finance Minister Michael Noonan has said plans to boost the construction sector will not lead to a property bubble.

Mr Noonan was speaking ahead of a Government announcement today of a package of measures aimed at stimulating activity in the building industry. He said more houses were needed.

Taoiseach Enda Kenny said the initiatives should give fresh hope to the 100,000 skilled construction workers on the live register.

Today’s announcement is expected to include an assessment of implementing a mortgage deposit insurance scheme for first- time buyers of new homes.

Mr Noonan said last night that the state-backed insurance scheme for mortgage deposits should be ready for inclusion in this autumn’s Finance Bill.

The Government has been looking at using mortgage deposit insurance as a mechanism to kick start housebuilding, particularly in Dublin.

Under the scheme the state would arrange insurance cover for part of the deposit currently sought by banks from first time buyers. This would allow the banks to reduce the size of deposit they require from borrowers, and still comply with new capital rules and loan to deposit ratios.

Mr Noonan said the details of such a scheme have yet to be worked out, but he believes it is a good idea, and it should be finalised in time for inclusion in the next Finance Bill.

The Minister said the scheme would be restricted to first time buyers of new build property only, it would cover only normal sized three and four bed semi-detached homes and it would be time limited.