Central Bank shows that Irish banks have a higher concentration of property lending than their European peers - with the concentration mainly in residential property.

But in a Financial Stability Note, the Central Bank said the banking system here has increased its capacity to absorb shocks - including property price falls - since the financial crisis. 

It said that more stable funding sources, higher capital and liquidity ratios, more intensive supervision and the introduction of macroprudential rules all contributed to this increased resilience.

The Central Bank also said that since the financial crisis, the overall level of concentration of the Irish banking system to property lending has remained relatively stable at around 70% of total balances. 

It noted that the share of residential mortgages is increasing and the share of commercial real estate decreasing.

The Financial Stability Note said that property exposures have been central to many financial crises, including Ireland's own financial crisis from 2008 to 2013. 

Commercial and residential property prices declined by 67% and 51% respectively between December 2007 and September 2013. 

It said that while prices have since recovered - in line with the improved economy - the level of concentration of the Irish banking system in property lending means that it remains vulnerable to potential price corrections. 

This is despite the banking system having increased its ability to absorb such shocks.

The Central Bank said the research concludes that the high degree of exposure to property in the Irish banking system underlines the importance of prudent underwriting by the banking system. 

"It also concludes that the Central Bank's mortgage market measures help in this regard, by protecting banks and borrowers against a marked loosening of such underwriting. 

"In doing this, the measures serve to strengthen the resilience of a concentrated system," the Central Bank added.