House price fall more than data suggest - Hurley
House prices may have fallen more sharply last year than the latest data suggest although demand for housing remains strong, Central Bank of Ireland Governor John Hurley said today.
Mr Hurley, who is also a member of the European Central Bank’s Governing Council, said Ireland’s banking sector is stable and well placed to withstand the current global market turbulence.
Latest published data showed house prices fell about 6 per cent in year-on-year terms in November, Mr Hurley told an Oireachtas Committee.
“This would, of course, mask variations that may exist and other industry sources suggest that the figure may be currently somewhat greater,” he said. “These developments in the market can be seen as part of a necessary adjustment phase following many years of high house price inflation.”
An end to Ireland’s decade-long property boom, when house prices quadrupled, is expected to lead to a sharp cooling in house building this year, which in turn is set to dampen the broader economy.
Mr Hurley said there were signs that underlying housing demand remained strong, however. “Private rents are continuing to rise, at about 11 per cent year-on-year, and employment and earnings are still growing,” he said.
But employment growth in Ireland was set to slow this year due to the weakening construction sector, Mr Hurley said. “While this is likely to lead to some increase in unemployment, the unemployment rate is expected to remain low by international standards,” he added.
Liquidity injections both in Ireland and through the euro zone system had helped Irish banks to deal with the current global turmoil.
“Our stress-testing of the banking system and our extensive financial stability analysis … indicate that Irish banks are solidly profitable and well-capitalised and with no major exposures,” he said.
“Our own banks remain robust in the face of the international credit problems and they retain a strong shock absorption capacity to deal with risks that have emerged.”
Not an awful lot in there, but given that it’s the Irish Times, it’s a bit surprising that the headline wasn’t “rents continuing to rise”.
I’ve been a lurker on the pin for a while - great site! Hope to be able to make some decent contributions over the next while.