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Prices have snapped back sharply since they started increasing a
decade ago, four years after a bubble collapsed and cut values
in half. They are now 123% above a trough reached in 2013 when
Ireland was emerging from an international bailout, the Central
Statistics Office said.
The central bank, which has since put in place some of the
toughest curbs on mortgage lending in the euro zone, said in a
Nov 2021 assessment that prices were around the level expected
based on economic fundamentals such an income growth.
House prices have risen sharply since then, growing 14.1%
year-on-year in June, down from 14.4% in May and cooling
slightly for the third successive month. Month-on-month growth
of 1.2% was the highest since late last year.
But the system remains "much safer" than previously, Goodbody
Stockbrokers Chief Economist Dermot O'Leary said.
"The macro-prudential rules are a crucial distinguishing
feature," he said, pointing to the curbs that limit mortgage
lending to 3.5 times a borrower's gross income.
Buyers also have to have a deposit of at least 10% compared to
the 100% mortgages offered during the runaway Celtic Tiger
economic boom that ended in the euro zone's costliest banking
rescue.
Mortgage drawdowns, which ballooned to an unsustainable 40
billion euros in 2006, are growing at a far steadier rate and
reached 10.5 billion euros last year. The country's much
shrunken banking sector is also far better capitalised.
However purchasing a home remains out of reach for many.
While Ireland built too many homes in the wrong places in the
2000s, supply has since constantly fallen short of demand and
rents have long passed their previous peak, limiting prospective
buyers' ability to save a deposit.
Daft.ie, Ireland's main listings site for residential property,
had just 716 homes available to rent for a population of 5.1
million people at the start of August.
"Just because the fundamentals support it, doesn't mean it's
necessarily the healthy outcome or the outcome you'd want as a
policymaker," said Ronan Lyons, an assistant economics professor
at Trinity College Dublin who analyses the data for Daft.
"It is the case that for the supply we have, we've got the
prices we have. It could be different if more homes had been
built."
(Reporting by Padraic Halpin; Editing by Hugh Lawson and John
Stonestreet)
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