Irish house prices rising faster than most in EU

Tuesday 21 January 2014 16.46
Estonia was the only EU country to overshadow Ireland in terms of percentage house price increases in the third quarter
Estonia was the only EU country to overshadow Ireland in terms of percentage house price increases in the third quarter

House prices in the euro zone were down by 1.3% in the third quarter of 2013, according to new figures from Eurostat, the EU statistics agency.

For the EU as a whole, the rate of price fall was 0.5% for the three-month period compared to the corresponding period in 2012.

When compared with the second quarter of 2013, house prices rose by 0.6% in the euro area and by 0.7% in the EU between July and September 2013.

House prices in Ireland rose at a faster pace than most other European countries by that measure.

Prices were up by 4.1% in the third quarter compared with the previous quarter.

This was the second highest rate of increase in the EU.

Only Estonia recorded a better rate of increase where prices jumped by 5.3%.

However, house prices in both Ireland and Spain remain more than a third below their 2007 peak.

While the data is more evidence of the euro zone's rebound from recession this year, it also shows the hangover from the property crash that followed the global financial crisis. Ireland's house prices are still 45% below their peak.

The bursting of property bubbles in Ireland and Spain - and to a lesser extent, the Netherlands and Portugal - erased years of economic growth and left banks with trillions of euros of bad loans. Unemployment also remains at record levels after soaring as the euro zone's crisis unfolded.

Ireland has now exited its EU/IMF bailout programme, while Spain, which took aid for its banks, has said it will not require more.

Meanwhile, an economic recovery is under way across the single currency bloc that counted 17 members at the end of 2013. Latvia, where property prices rose between July and September, joined in January.

Wide divergences in the pace of recovery remain, however, and house prices fell in the quarter compared with March-June in Italy and Slovenia, two countries struggling with high debts.

Property has generally retained its value in the wealthier, northern economies of Belgium, France and Germany.

Unlike non-euro zone Britain, where house price expectations hit a 14-year high in December, the euro zone's weak property market will do little for households that are unable to buy when banks remain reluctant to lend.

Despite record low interest rates, many families are struggling to obtain financing to buy properties and banks are lending less to the corporate sector, wary that the economic recovery remains fragile.