Dublin: Residential property prices in Ireland have risen annually for the first time since a catastrophic crash five years ago sent the country spiralling towards financial disaster, official data showed on Tuesday.
“In the year to June, residential property prices at a national level, increased by 1.2 per cent. This is the first annual increase since January 2008,” the Central Statistics Office said in a statement.
“It compares with an annual rate of decline of 1.1 per cent in May and a decline of 14.4 per cent recorded in the twelve months to June 2012,” the CSO added.
Property prices also rose by 1.2 per cent in June from May, which was the third consecutive month-on-month increases.
“The stabilisation in the market has been helped by buoyant demand from cash buyers, which should help to underpin prices going forward despite the impending threat of increased repossessions,” Davy Research said in a note to clients.
While Tuesday’s figures are a tentative indication of recovery, property prices in the bailed-out Eurozone nation remain 50 per cent lower compared with their peak in 2007, leaving thousands of owners in negative equity, or with mortgages larger than their property’s worth.
“Following more than half a decade of price declines, residential property prices are increasing again in Ireland, with the recovery being led by the capital [Dublin],” Dermot O’Leary, chief economist at Goodbody stockbrokers, said. “Lack of available supply is the primary reason for the movement upwards in prices.”
Ireland’s banks lent aggressively to professional and amateur property developers during a decade of easy credit and economic growth and were left perilously exposed when the market crashed.
The Irish government pumped billions of euros into the banking sector soon after to keep it afloat and was eventually forced to enter an EU-IMF bailout programme in late 2010.
Dublin also established the so-called toxic bank, the National Asset Management Agency, in 2009 to remove high-risk loans from the Irish banking sector.
It has since acquired loans with a nominal value of €74 billion (Dh358.6 billion) from a number of participating Irish banks in an attempt to repair their balance sheets.
Official data last month meanwhile showed that Ireland had fallen back into recession for the first time since 2009, with the nation rocked by sliding exports and consumer spending.
Gross domestic product (GDP) shrank by 1 per cent in the third quarter of 2012 and by 0.2 per cent in the fourth quarter, according to CSO data.
This contraction over the second half of 2012 meets the technical definition of a recession — two quarters running of falling output.