Eurozone house prices rise 7%

HOUSE prices across the eurozone rose by an average of 7% each year since 1999, the European Central Bank said yesterday.

Ireland was one of five countries where house price inflation exceeded the eurozone average, joining Spain, Greece, the Netherlands and France. Property prices in Germany and Austria fell over the period.

The ECB said price rises from 1999 were significantly stronger than the previous four years, when an average increase of just 1.5% was recorded. Lower interest rates, strong economic growth and investors shifting from volatile stock markets to the perceived safety of property, were the main reasons for the rise in prices.

Countries that saw the highest price rises, including Ireland, benefited most from the introduction of the euro, the ECB said, as interest rates fell sharply from historically high levels during the final stages of the euro convergence programme.

The ECB findings will come as little surprise to observers of the Irish property market, where the average price of a house in October was almost 230,000, according to the most recent house price index published last month by Permanent TSB and the Economic and Social Research Institute (ESRI). This figure represented a 14% increase on the previous year and was more than three times the average house price in 1996, when the index was first published. Recent research from the Nationwide building society showed the average price of a house in Britain in October was almost 190,000. British house prices were not included in the ECB study but have also grown strongly in recent years.

The ECB also said country-specific factors were important in understanding the growth in residential property prices.