House prices set to cool off, says Central Bank boss

By Peter Flanagan

Ireland’s house market is set to cool down, Central Bank governor Philip Lane has said, as a renewed surge in prices stokes concerns about another bust. House prices increased 13% in the year to the end of April, the CSO said last week, making here one of the hottest property markets in Europe.

“What we have now is a strong market but we think over time as housing supply increases some of this will cool off,” Mr Lane said at an event in Sintra, Portugal.

“We are putting risk- management parameters in place so if there were any downturn in the future, there are cushions,” he said.

Prices have risen 76% since early 2013. The Central Bank has hinted it could force banks to hold more capital to insulate themselves from any future downturn. Mr Lane emphasised that, for now, price growth reflected the economy.

When asked if he was concerned about house price inflation, he said: “It is important to put it in context. We have an economy that is growing quite quickly, so employment is growing strongly, wages are picking up. So, when we talk about house prices, there are some strong fundamentals there. It’s also the case that we are far below peak prices but, of course, any central bank is going to keep a close eye on the housing market.

“We have put in place credit measures, so there’s a limit to the loan-to-value ratio and loan-to-income ratio for mortgages. We are putting risk-management parameters in place. If there were any downturn in the future ... there’s buffers there in terms of down-payments, in terms of limits on the amount of debt. So what we have now is a strong market but we think over time as housing supply increases, some of this will cool off.”

- Bloomberg

More on this topic

Eoghan Murphy wants to remain as Housing Minister 'as long as' possible

Has KRIB sounded the death knell for the immersion?

Cork council looking at five affordable housing sites

Confronting the housing fiasco - Going Dutch may help ease crisis

More in this Section

Apple prepares to unveil TV and news subscription services

Michael Creed pledges support to farmers

Bayer chief claims full board backing

The Monday interview with David Cadogan: Going from strength to strength


Lifestyle

Sleeping next to a loud snorer? Here’s how to finally get some peace at night

Seven blissful places to go on a mother-daughter date this weekend

Appliance of Science: Why do we age?

Why anis don’t put all eggs in one basket

More From The Irish Examiner