Irish capital’s rich postcode areas see 22% increase in property prices while costs outside the capital remain stagnant
The Irish capital is at the centre of a new house price boom, according to a survey this week that named Dublin as the world’s fifth fastest rising property market, and raised concerns over a new asset bubble in the republic.
The banks of the River Liffey are hosting a resurgent property market that is exceeded only by Jakarta, Auckland, Bali and Christchurch, said estate agency Knight Frank.
Its report on global house prices found that Dublin property prices rose faster than Los Angeles, Tokyo and Dubai, with values increasing by 17.5% in 2013 compared with the previous year.
However, a population scarred by the consequences of its last property boom – a €67.5bn (£56bn) rescue loan from a trio of international lenders – is wary of signs of a house market recovery.
A group representing thousands of Irish mortgage holders has raised concerns over the price increases, pointing to thousands of repossessed properties that are not on the market and whose absence from estate agents’ windows could be holding up the prices of houses that are being sold.
David Hall, a co-founder of the Irish Mortgage Holders Association campaign group, said the latest figures on mortgage arrears this year showed that there were 1,600 empty properties held by the Irish banks that were not on the market. He also pointed out that Nama – the state agency which bought thousands of properties abandoned by banks and builders after the 2008 financial crash – has held back 14,000 properties from entering the market.
As a consequence, house prices are higher, said Hall, who added that price increases for commercial and domestic properties in Dublin had been “very patchy” as some homeowners continued to suffer from the after effects of the credit crunch.
Property prices in rich Dublin postcodes such as D14 may have increased by 22% last year, but tens of thousands of Irish mortgage holders are still in arrears and the hikes in the cost of a house are restricted to the richer suburbs of the Irish capital, especially south of the Liffey.
House prices are surging in affluent areas of south Dublin such as Clonskeagh, with a three-bed bungalow in the area fetching €740,000 – an increase of two-thirds on a similar property nine months earlier. Outside the capital, property prices remain stagnant at best. A 10-bedroom house in Monaghan, near the border with Northern Ireland, is being sold for €90,000.
Yet for a small country such as the Republic it is the scale of the mortgage arrears which will temper any talk about a new property boom.
By the end of 2013 the total value of mortgage arrears in the Republic was €2.1bn, including €1.8bn owned by borrowers who had fallen behind in their payments for more than a year.
Hall also referred to a report by the global ratings agency Fitch, which predicted further mortgage repossessions this year. Fitch said one in five houses where mortgages had been in arrears for more than three months could be repossessed.
There are still 700 “ghost estates”, the name given to empty private housing estates built during the boom, many of them mini-new towns constructed around the edges of greater Dublin.
Hailing Ireland’s exit from its bailout in December, the country’s finance minister, Michael Noonan, said the nation had emerged from its worst crisis since the potato famine.
Warning that there must be no more debt-fuelled property sprees, he said: “We can’t go mad again.”
The Knight Frank report is raising concerns that the wrong kind of economic recovery is on the way, with thousands of homeowners still struggling on the sidelines.
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