Ireland still faces housing crisis
Ten years after Ireland‘s property bubble burst, the economy is recovering from the ravages of a deep recession but a housing crisis remains, due to a supply shortage and spiralling prices.
Sales prices have increased by 47 percent since 2013, when they hit rock bottom, while rents are going up by double digits each year.
“Prices were inflated in 2007, they were too high, but they fell by such an amount that they probably fell by too much,” said Kieran McQuinn, research professor at the Dublin-based Economic and Social Research Institute.
“On the one hand they’re coming back to some long-run level, but equally that long-run level is increasing itself because the underlying economy and demand are so strong.”
As the global financial crisis hit, house prices halved, unemployment soared and Ireland was forced to seek emergency funding from the European Union and International Monetary Fund.
Today, the housing market is a victim of Ireland’s return to economic growth — the shortage is particularly evident in urban areas, which fuel a national average rent of 1,159 euros a month.
Experts predict the increase in prices to continue for another two years as the construction industry, which was hit badly in the crisis, catches up with increased demand.
McQuinn does not expect a new housing bubble, however. Noting that the last one was fuelled by cheap credit and reckless lending, he said: “You don’t quite have that here.
“You’re beginning to see credit flowing into the market… it’s picking up again, but from a very low base.”