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The Republic of Ireland’s amazing property boom seems to have finally come to an end with a number of sources confirming that the unprecedented growth of recent years has come to a stop.
In fact, house prices are falling in many parts of the country and are expected to grow at a rate of just two percent next year, which is less than the rate of inflation there.
House prices peaked late last year but a series of interest rate hikes by the European Central Bank has dented investors’ confidence.
A number of sources, including the International Monetary Fund and the OECD, have said that house prices in the European Union country are overvalued.
Although many analysts disagree with this, the growth in the price of a home there in the past decade, initially fuelled by the famous ‘Celtic Tiger’ economy, has not been seen anywhere else in Europe.
The Central Bank of Ireland announced on Tuesday that growth in mortgage lending is now at its slowest pace in five years.
This will offset widespread fears that Irish citizens are over-borrowing, but confirm the sudden slowdown in the Irish housing market.
Home loans were up 19 percent for the year in June, down from 20 percent in May and look set to keep falling for the near future at least.
Borrowing rose by €1.6 billion last month, with $131.8 billion now owed in outstanding residential mortgages in the country.
The European Central Bank is expected to hold its interest rate at 4 percent this month, but it is likely to rise at least a quarter of a percent in September or October.
ECB interest rates have almost doubled from 2.75 percent to 4 percent in the last year.
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Posted on Aug-02-2007
