The Independent Alliance has raised concern about the first-time buyers scheme and its effect on housing prices.

The proposal has met strong criticism from Fianna Fáil, particularly on the €600,000 threshold.

Speaking to The Irish Times, Kevin "Boxer" Moran said he was "curious and concerned" about the consequences.

Mr Moran said the Government might have to reflect on the measure if there was a trend in increased prices.

He said: “I will be raising it with my Independent Alliance colleagues . . .

“We will not be jumping up and down about it but if it is having a negative effect we will need to examine and possibly change it.”

The scheme, spearheaded by Minister for Housing Simon Coveney, will provide first-time buyers with a rebate of tax paid over four years.

The rebate is worth 5 per cent and applies to a maximum value of €400,000, allowing for a maximum rebate of €20,000.

However, first-time buyers who buy new homes will still be entitled to claim the rebate for houses worth up to €600,000, even though the rebate doesn’t apply to them.

Fianna Fáil has claimed the €600,000 threshold makes the scheme into a “mansion grant” and has argued the incentive should be extended to second-hand homes.

The party’s housing spokesman Barry Cowen said the party would be tabling its own amendments to the scheme.

Mr Cowen said he believed the Independent Alliance should support his measures.

He said: “These TDs claim to be supporting ordinary people and I think on reflection they will understand Fianna Fáil’s concerns.

“I will be asking the Independent Alliance to support the amendments we table.

“In particular we will be asking them to back our amendment to lower the ceiling to €400,000.”

Sinn Féin said it would support some of Mr Cowen’s measures .

The party’s housing spokesman Eoin Ó Broin said: “Clearly this scheme, in addition to being a bad idea in general, also has some particularly foolish elements: €600,000 for a starter home? €500,000? €400,000? They’re not starter home prices.

Withdraw scheme

“But the fundamental flaw is it’ll push up prices. On that grounds, we’re saying the Government should withdraw the scheme.

“If Coveney’s going to press ahead, he needs to outline how he’s going to monitor house prices over the next 12 to 18 months, and if there’s any evidence of house price inflation – as we believe there is going to be – then he needs to suspend the scheme.”

Defending the scheme, Mr Coveney said he was confident 6,000 first-time buyers would benefit from it next year.