Kenny warns against property bubble
Taoiseach Enda Kenny has warned the construction sector must take progressive measures in the face of rising property demand to avoid another catastrophic bubble burst.
As a new report heralded a gradual recovery in the market with strong demand for new homes in the capital, the Taoiseach said he did not want a repeat of the so-called Tiger years.
"What we need to do here is to have a progressive and effective set of measures put in place to grow the construction sector in a way that is not going to create a bubble situation," Mr Kenny said.
He said there had been an "absolute catastrophe" in the aftermath of the property peak in 2007, when the sector went from delivering over 35% of GDP to now contributing less than 6%.
But he noted he was now seeing "queues outside premises where people are viewing to buy".
In its report released today, Goodbody Stockbrokers claimed the market rebound will be "multi-speed", with Dublin leading the way in house price rises in the coming years.
Chief economist Dermot O'Leary said the turn in the market was largely a Dublin affair, with prices rising at an annual pace of around 8%, while prices continue to fall elsewhere.
"Oversupply is still a factor in certain parts of the country, but in the Greater Dublin area, it is the shortage of appropriate supply that is pushing prices upwards," Mr O'Leary said.
Goodbody's warned that supply was now so low in Dublin that construction should start immediately to cope with demand for up to 10,000 new homes before 2016.
Its report also notes that residential prices have now halved since the peak of the boom in 2007, while commercial property prices are down 67% and building work has collapsed by 80%.
Latest figures from the Central Statistics Office revealed the value of homes jumped by 10.6% in the capital in the past couple of years.
The surge, recorded in August, was the strongest hike since the housing market collapsed.
Dublin valuations are now increasing by around 3,000 euro a month.
Meanwhile, the Irish Banking Federation confirmed 1,776 mortgages were approved in August - a hike of 11.1% from the year before.