Irish house prices rising at much higher rate than most EU states

House prices in Ireland are rising at a much higher rate than in most EU countries, according to the latest Eurostat figures.

Comparing figures for the three months to June this year with the first quarter, the average increase in the cost of a house in Ireland was six times more than the average in the EU.

This was the fourth biggest increase in the 23 countries for which figures were available. Prices in Latvia were up 5.1% as the country comes out of a recession, followed by Estonia (3.7%), Denmark (3.1%) and Ireland (3.2%).

The jump in Irish property prices is even greater when compared to the average in the eurozone both when comparing the two first quarters of this year, and April-June this year with the same period in 2012.

The increase is good for the banks holding mortgages, especially with the asset review under way as increased property prices cuts their level of debt.

With so many construction firms going out of business following the property crash and with banks reluctant to lend, the numbers living in rented accommodation is now close to 20%, according to the Irish Property Owners’ Association.

There are very few houses being built as shown by the latest figures from the Construction Industry Federation. Work started on just 436 houses in Dublin in the first six months of this year, only two more than in the same period last year.

Cork and Galway showed a slight increase with 242 and 225 units respectively.