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price explosion

House prices were up a whopping 16.3% in Ireland at the end of 2014...

… giving us easily the largest increases seen across the EU last year.

shutterstock_149064860 Shutterstock / solarseven Shutterstock / solarseven / solarseven

THERE’S A SLIGHT feeling of impending doom elicited by the latest European figures regarding prices in Ireland’s residential market.

The numbers from Eurostat, the EU’s central statistics service, indicate that Ireland saw increases of 16.3% in housing prices from the final months of 2013 to the same period in 2014.

This is by some distance the largest increase seen either in the EU or in the Eurozone area for that time range.

Following in a distant second are Malta (annual increase of 11%) and Sweden (up 10.4%).

The UK saw an increase of 10% in house prices during the same timeframe.

Eurostat Eurostat Eurostat

When it comes to quarter-on-quarter increases Ireland (up 3.8%) comes second in the EU behind Malta (up 4.6%) – with most of our largest hikes being seen earlier in the year it seems – this ties in with the news that property prices at the end of 2014 slowed as people pondered the then forthcoming announcement on mortgage rules from the Central Bank.

Overall, prices were up 2.6% across the European Union as a whole. Prices quarter-on-quarter across the EU remained stable.

Naturally, given prices are relatively stable across the wider geography some European nations have seen price drops – with Slovenia (-4.4%), Cyprus (-3.3%), and Latvia (-3.2%) seeing the biggest falls.

Eurostat 2 Eurostat Eurostat

A recent report by Goodbody Stockbrokers indicated that Irish house prices are likely to continue rising until the end of this decade at the earliest, as issues of supply-and-demand in the resurgent economy continue to stretch the market to breaking point.

“Irish demographics have not changed because of the crisis,” said Goodbody chief economist Dermot O’Leary.

There is a need for 30,000 units a year nationwide, but fewer than half that are being built.

However, Ronan Lyons, chief economist with recently told that vast price increases are far less likely going forward, the reason being that the Central Bank’s new rules on mortgage lending have directly tied what a bank can lend to someone to the borrower’s income.

Given incomes move at a far more gradual pace than housing markets in general, the controversial new rules may be having the desired effect of normalising our housing market to an extent.

So, future price increases in Ireland will in all likelihood be less dramatic. Hopefully, at any rate.

Read: These are the cheapest places in Ireland to buy a family home

Read: House prices have increased sharply, but “are still around fair value” (apparently)

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