Budget 2027 is broadly to be welcomed. The Government has committed €9.4 billion to housing next year, and it is investing in the water, roads and planning capacity that decide whether homes get built at all. That deserves to be applauded.
However, it could have an unintended consequence for Galway: speeding up house building in the regional towns at the expense of the city. Help to Buy rises to €35,000. The €500,000 price ceiling stays. Builders will build where that ceiling still works, and first-time buyers will follow the support. My prediction is more new homes outside our cities, longer commutes, and young working families slowly priced out of city living.
The irony is striking. The Government is spending billions to remove the bottlenecks to housing, while keeping the cap in place that decides where those homes get built.
In Galway city, delivering a new three-bed semidetached home for under €500,000 is already an impossibility. Rising costs of land, labour, materials, finance and regulation have long since put paid to that.
In practical terms, the Help to Buy cap is an extraordinarily blunt instrument. With the same threshold applied nationwide. Imagine a scheme whereby a buyer in Ballybofey faces the same limit as a buyer in Ballsbridge. Those are vastly different markets with totally different economics. City markets, it would appear, are being designed out of the grant system, and this will have a consequence.
Incentives shape commercial decisions. Developers look at where buyers can get support and where a scheme stacks up. Take a couple working in Parkmore or at University Hospital Galway. They qualify for Help to Buy, then find that the new homes near work are priced above the ceiling. So, they buy further out, and add to the pressure on roads, schools, water and public services in towns that were never planned for it.
There is a social cost too. A city needs young families, settled neighbourhoods, full schools and communities that span generations. If working families cannot put down roots where they work, and their sons and daughters cannot buy a home nearby, then Galway loses some of its character and social cohesion. We should build communities around employment, not ask people to organise their lives around an ever longer commute.
The fix is modest. Raise the ceiling by 10 per cent in the major cities, to €550,000, and keep €500,000 elsewhere. Review it every year against construction costs so it never falls this far behind again. Monitor it; to be sure it delivers homes rather than just higher prices.
To be fair, the budget also got a lot of things right. It includes €3 billion for 11,250 social homes and more than €1 billion for starter homes, €1.5 billion in capital for Uisce Éireann, more resources for planning, and transport funding that includes the Galway Ring Road. Without roads, water and planning, zoned land never becomes a community. The 162 per cent rise in commencements is also very encouraging.
For developers, the Budget offers little new on viability or development finance. Capital gains tax falls from 33 to 31 per cent, but not on development land, which seems an odd way to get sites to people who will build. For sellers, the cut may bring some investment properties to market, although I would argue a larger cut to 25 per cent would have represented a much more decisive move. The seven per cent tax on derelict buildings should return more neglected homes to use. Renters get a €1,150 tax credit, and rent-a-room relief of €16,000 now extends to qualifying garden units.
But helping people afford a home is not the same as creating homes where they are needed.
Galway has the demand, the jobs, the builders and the sites. What it needs is a policy that reflects what it costs to build in the city. Otherwise, we will spend billions clearing bottlenecks, only to find our own incentives have pushed another generation further from their work.
The Government has increased the support. Now it should review the cap. Good housing policy is not only about how many homes we build. It is about building them in the right places, for the people who need them.
