Is Ireland entering another property bubble?

House prices are predicted to rise by at least 12% in the next three years -- a statistic that shoots right to the heart of first-time buyers. Average prices in Dublin are rising by 100 euros per day, 4.50 euros per hour, or 7 cents a minute. 

Ciara Kenny
Ciara Kenny The Irish Times, Ireland
Source: The Irish Times
Is Ireland entering another property bubble? - NewsMavens

Why this story matters:

This time last year, my partner and I decided we would like to buy our first home. We embarked on our search eager and full of excitement, but as the next 12 months slipped by, we’ve become increasingly frustrated and disheartened by the process of trying to buy a home in the middle of a housing crisis.

After the spectacular rise and fall during the Celtic Tiger and the financial crash that followed in 2007/8, property prices have been rising at an alarmingly fast rate, with prices in Dublin now close to levels from 2005.

A report from property listings website Daft.ie, published in June, shows that average asking prices in Dublin rose by 3,221 euros per month in the previous year. That amounts to more than 100 euros per day, 4.50 euros per hour, or 7 cents a minute.

A new report from the Economic and Social Research Institute (ESRI), published this week, predicts house prices will rise by at least 20% in the next three years -- a statistic that shoots right to the heart of first-time buyers like us.

The study compares house prices in the Republic with prices internationally and looks at price-to-income ratios and price-to-rent ratios before reaching the “unambiguous” conclusion that “the Irish market does not yet display any signs of overheating”.

It characterizes the market as one where prices have almost fully recovered from the substantial declines experienced between 2007 and 2013, but claims that "by international comparisons, Irish prices appear to be quite affordable”.

It’s a statement that many househunters, including ourselves, would seriously question. We both have good jobs, a very decent deposit thanks to an inheritance, and are still struggling to find a house to buy.

Cliff Taylor sums up the problem excellently in his column:

“It is a shortage of supply in the market, mixed with a recovering economy, which has pushed up prices. In some cases the problem for buyers is that they can’t afford a property but, in many cases, it is that they simply can’t find one,” he writes.

When house prices are rising at 12-13% each year and rents -- already well above Celtic Tiger peaks -- are also soaring in double digit figures, while at the same time earnings are rising at 2-3 per cent, the dangers are pretty clear, he warns. “It doesn’t have to be a bubble to be a big problem. History may not be repeating itself, but we are in the middle of a nasty property squeeze.”

Details from the story:

  • Irish house prices are rising at 12-13% each year 
  • Average asking prices in Dublin rose by 3,221 euros per month in the 12 months to June
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