The country's home market is set to cool down, the Central Bank Governor said today, as a renewed surge in prices stokes concerns about another bust.
Home prices increased by 13% in the year to the end of April, the Central Statistics Office said last week.
This makes Ireland one of the fastest growing property markets in Europe a decade after the bust that devastated the economy.
"What we have now is a strong market but we think over time as housing supply increases some of this will cool off," Philip Lane, who is widely tipped to be the next ECB chief economist, said in a Bloomberg TV interview in Sintra in Portugal today.
"We are putting risk management parameters in place so if there were any downturn in the future, there are cushions," Professor Lane said told Bloomberg.
Surging home prices to cool off, says Central Bank chiefhttps://t.co/TpZi2xKnff pic.twitter.com/hhrnD9tCfc
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Property prices have increased 76% since early 2013, as the market recovers from a crash which helped force the country into an international bailout three years earlier.
The Central Bank has hinted in recent months it could the force banks to hold more capital to insulate themselves from any future downturn.
Professor Lane emphasised that, for now, price growth reflected the economy.
"We are an economy that's growing quite quickly so employment is growing quite strongly and wages are picking up," he said.
"So when we talk about house prices there are some strong fundamentals there," he added.
