“Ireland Faces Surge in Housing Demand and Prices Following Government and Central Bank Intervention”
Dublin: A recent report indicates that the Irish government’s and central bank’s interventions are poised to drive up demand and prices in the housing sector. Notably, the report emphasises that the central bank’s mortgage measures are not a panacea for addressing housing affordability challenges. It underscores concerns that implementing rent controls could potentially decrease housing supply and, paradoxically, heighten demand. Presently, the government has imposed a 2 percent rent restriction in designated pressure zones nationwide.
The report takes a critical stance on the central bank’s decision to elevate loan limits for second-time homebuyers from 80 to 90 percent of the property’s value, deeming it a risky move that could significantly impact the market. The International Monetary Fund (IMF) report cautions that the central bank should exercise prudence in its interventions to ensure the sustained credit quality of the mortgage market.
On a positive note for the government, the IMF, while expressing support for next year’s budget, also emphasises the need for increased investment to compensate for previous shortfalls. This stance aligns with accusations from the Irish Fiscal Advisory Council, alleging that the government has exceeded the five percent cap. Finance Minister Michael McGrath welcomes the IMF’s endorsement of the government budget.
Simultaneously, the Central Statistics Office (CSO) reports a 2.3 percent increase in house prices across the country in October, with experts predicting further rises in the upcoming year. Despite growing concerns about homelessness and housing shortages, investor confidence in the country remains resilient, as noted by Simon Cowan.
The IMF’s positive outlook on Ireland’s economy is a stark contrast to predictions of a recession by other entities such as the ESRI, EU, and OECD. The IMF forecasts 1.5 percent growth in the Gross Domestic Product (GDP) for the current year and anticipates a robust 2.7 percent growth in the following year. Inflation in Ireland is expected to average 5.3 percent this year, with a projected decrease to 3.2 percent in the next year. The report affirms that the European Union is on track to achieve the targeted average of 2 percent in the coming years.
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