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Dublin Home Price Surge Matches Celtic Tiger Bubble-Era Gains

Nov. 27 (Bloomberg) -- Dublin home prices surged an annual 15 pecent in October, matching increases at the height of the country’s real-estate bubble, as the economy showed signs of recovery and supply remains limited.

Residential property prices in the Irish capital climbed 2.3 percent from September, the central statistics office said today. Across the country, prices increased 6.1 percent from a year earlier and 1.8 percent from the previous month.

Irish home prices are still 47 percent lower than the 2007 peak, in a real estate bust which pushed the financial system to the brink of collapse. Now, signs are emerging that the economy is stabilizing, with employment rising 3.2 percent in the third quarter from the year-earlier period.

“Although a lot of uncertainties around future prices still exist, as long as current trends continue the negative equity problem in the Irish banking system will continue to be gradually eroded,” said Ronan Dunphy, an analyst at Glas Securities, in Dublin.

While prices soared in Dublin, they rose 1.5 percent elsewhere in Ireland in October. Prices dropped 0.3 percent on an annual basis.

In part, price increases have been driven by a lack of supply. Tracker mortgages, which were introduced in Ireland in 1999, today account for more than half of the nation’s 140 billion-euro home-loan market, according to the central bank. By moving, holders of trackers lose those loans.

“A lack of supply in the capital is now supporting house prices,” said David McNamara, an economist at Davy, Ireland’s largest securities firm. “The upturn is certainly apparent, but we’re a little more circumspect on the magnitude of the appreciation in house prices. The index covers mortgage transactions, of which there have been very few this year.”

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To contact the editor responsible for this story: Dara Doyle at ddoyle1@bloomberg.net

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