Taylor Scott International News
Property prices in Ireland increased nationwide by 2.3% in August and are up 9.5% compared to a year ago, the latest official data shows. In Dublin property prices rose by 2.8% in August and were 8.2% higher than in August 2014. A breakdown shows that house prices are rising faster than apartments at 3% and 0.3% respectively. However, the index report from the Central Statistics Office says that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. In the rest of Ireland, excluding Dublin, prices rose by 1.9% in August and were up 10.8% compared with August 2014. This means that at a national level residential property prices were 35.4% lower than their peak level in 2007 and excluding Dublin residential prices were 38.7% lower than their highest level in 2007. In Dublin house prices were 34.4% lower than the peak, apartment prices 40.4% lower and Dublin residential property prices overall 36.2% lower than their highest level. However, there are concerns that house prices are growing too fast. The Irish economy grew by a Eurozone record of 7.2% in the second quarter and according to the Organisation for Economic Development and Coordination (OECD) is set to grow by 5% overall in 2015 and 4% in 2016. But the OECD is concerned that rapidly rising house prices still pose one of the biggest risks to financial stability and an uncontrolled property boom would ‘increase vulnerabilities, especially if it were associated with further indebtedness’. Its latest review says that such strong price rises may again spark a reinforcing spiral of higher property prices and credit leading to another misalignment of property prices and eventual burst that causes large losses in the banking sector. ‘To avoid repeating past mistakes, now is the time to build resilience against future nasty surprises while ensuring the recovery is sustained, and its benefits broadly shared,’ said Angel Gurría, secretary general of the OECD. The OECD suggested that the Irish government should take measures to cool the market, such as avoiding subsiding first time buyers and encouraging growth in the rental market. Taylor Scott International
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