During the 1990s and first half of 2000, Ireland had one of the longest property booms on record. Between 1996 and 2006, the average price of second homes rose in Ireland rose by over 300%. The average price of new houses rose by 250%, according to the Department of Environment, Heritage and Local Government (DoEHLG). However, since the peak in early 2007, Irish house prices have fallen 50% – and there are few signs of promise for the Irish housing market.
The rapid rise in Irish prices was initially a reflection of economic fundamentals.
- Economic growth enabling more people to be able to afford to buy.
- Irish house prices were relatively cheap in the early 1990s.
However, from the early 2000s, house prices increasingly reflected a boom period, with prices pushed higher by:
- Speculation, with property developers buying to let.
- Expectations of continued rising house prices encouraging people to get into property.
- Rising house prices encouraged home owners to take out equity withdrawal and use the money to invest in second homes.
- A booming and unregulated banking sector. The finance boom encouraged banks to lend more variable mortgages with lower deposit requirements – 100% mortgages were common. Also people borrowed very high salary multiplers. Mortgages upto 10 times salary were said to be given.
Irish vs UK house prices
Both property markets see a sharp fall in house prices in 2008/09. But, whereas the UK property market stabilised, Ireland continued to see one of the longest continued periods of falling house prices – making it one of the biggest global property collapses.
The Irish housing market crash