House price rises ‘could hit lending standards’

The rapid increase in house prices could put affordability beyond the average buyer and lead to a deterioration in lending standards as there is a surge in the demand for mortgages, warned the Central Bank.

There has been a double-digit increase in house prices over the past year, particularly in Dublin. Year-on-year growth observed since last June has reached over 23%, compared with a previous high of 22.5% recorded in August 2006.

“These developments raise a number of concerns from a financial stability perspective,” said the Central Bank in its latest Macro-Financial Review.