Return to Celtic Tiger as property prices hit 2007 record high

The Celtic Tiger is back… for house prices at least with new data showing that the cost of a house has now matched the peak of the boom in April 2007.

Fueled by a shortage of supply, which experts have described as a “total disaster” for a generation excluded from home ownership, the average cost of a house in Ireland now stands at €340,379.

And in the capital, that figure soared to €516,603, after a surprising 14.1% rise in the year to June 2022.

Those struggling to get a foot on the property ladder received another blow yesterday with the news that lender ICS Mortgages will limit the amount buyers can borrow, while Avant Money is expected to hike rates of interest next week.

The Celtic tiger is back… for house prices at least with new data showing that the cost of a house has now matched the peak of the boom in April 2007. Photo: Shutterstock

Housing Minister Darragh O’Brien acknowledged that increasing supply will be crucial to solving the housing crisis, but admitted the government has work to do to achieve its ambition of building 33,000 homes a year .

However, housing expert Dr Rory Hearne of Maynooth University described the situation as ‘a total disaster’ and blamed the government squarely.

He said: “Government policy has done this. Rather than changing our housing system to provide affordable housing, they rebooted it for banks, developers, landlords and investors. He said a generation’s hope for a home had been ‘sacrificed’.

But Minister O’Brien insisted the government is making progress on procurement.

He said: ‘We are focused on delivering more homes and, encouragingly, CSO figures showed a record number of homes were completed in the second quarter of 2022, compared to any quarter since the start of the CSO series in 2011. This year, the government’s objective is the delivery of 24,600 homes. By the end of June, just under 25,000 new homes had been completed.

He noted that home completions, starts, permissions, purchases, first-time buyers and mortgage drawdowns are all at record highs, adding: “This significant increase in supply is promising…but we need to get to a point where we are delivering an average of 33,000 new homes per year.

Those struggling to get a foot on the property ladder received another blow yesterday with the news that lender ICS Mortgages will limit the amount buyers can borrow. Photo: Daft.ie

Ronan Lyons, assistant professor of economics at Trinity College and market expert for property website Daft.ie, said boom prices were driven by low supply, adding: “It is true that for the offer we got, we got the prices we got.

According to the Central Statistic Office residential property price index, the average price in Dublin of €516,603 was the highest of any region or county. Dún Laoghaire-Rathdown had the highest average price in the Dublin area at €715,870, while South Dublin had the lowest price at €408,344.

Outside of Dublin, the Middle East was the most expensive region, with an average price of €351,161. Wicklow was the most expensive county, with an average price of €452,771. The border region was the least expensive region, with an average price of €179,615. Longford in the Midland region was the cheapest county, with an average price of £156,354.

The CSO said its house price index rose by 14.1% in the 12 months to June 2022, with prices in Dublin rising by 11.8% and prices outside Dublin by 16%. This brought the average house price in Ireland to €340,379. The most expensive Eircode was around Dublin 4, where the average price was just over €933,000, followed by Dublin 6 and Glenageary.

Comparisons to the Golden Age of the Celtic Tiger are not entirely straightforward, as CSO data, based on stamp duty returns, is only from 2010.

Prices are now 123% above a low reached in 2013 when Ireland emerged from an international bailout, the CSO said. Photo: Shutterstock

However, the Department of Housing has data showing that the highest average price for a new house nationwide peaked in the second quarter of 2007 at €331,947. The highest average price for a second-hand house was recorded in the third quarter of 2006, at €389,871.

Prices are now 123% above a low reached in 2013 when Ireland emerged from an international bailout, the CSO said.

Trevor Grant, chairman of Irish Mortgage Advisors, said housing inflation would continue, even if there was a return of lenders offering longer mortgage terms or allowing higher income multiples.

Meanwhile, it also emerged that ICS Mortgages was cutting its lending, capping the amount of new mortgages at 2.5 times a couple’s income and stating that couples must have a joint income of at least €100,000 to get a mortgage loan.

Rebecca Moynihan, a Labor senator and housing spokesperson, told Newstalk: ‘I think it’s very worrying…Between 2004 and 2019 the number of 25 to 34 year olds who own their homes has halved. now trapped in a rental economy where rents exceed €2,000 a month…. It’s very similar to when the market crashed.

She suggested the state could become a mortgage-granting force, to help those who otherwise couldn’t get on the ladder.

But Goodbody Stockbrokers Dermot O’Leary said he did not believe Ireland was heading for another property crash. He said Central Bank rules that limit mortgages to 3.5 times the borrower’s gross income were a “crucial distinguishing feature”.

Carol N. Valencia