DUBLIN, June 12 A protracted delay in addressing
localised housing shortages in Ireland, particularly in Dublin,
has the potential to put prices on an unsustainable path again,
the country's central bank warned on Thursday.
House prices, which quadrupled during Ireland's Celtic Tiger
boom years, fell by more than half from 2007 in a devastating
property crash that led the country into a costly bank rescue
and the EU/IMF bailout it completed last year.
Prices have begun to recover over the past two years and
while they remain 48 percent below peak in Dublin, house prices
in the capital rose 17.7 percent year-on-year in April compared
to a 1.3 percent increase elsewhere in the country.
In its biannual macro-financial review, the central bank
said supply shortages were an important factor in recent house
price increases, with just 8,000 new units built last year
compared to an average annual output of about 33,000 since 1970.
"By their nature, they take time to address and, accordingly,
should be a priority for policy, if imbalance in the housing
market is not once again to become a potential source of
financial instability," the central bank said.
"A protracted delay in addressing these shortages has the
potential to put house prices on an unsustainable path.
Forward-looking indicators such as commencements notices do not
give the impression that an increase in the supply of new builds
is likely any time soon."
Ireland's government said last month that while the crash
had left an overhang of stock in many parts of the country, it
recognised that there were particular concerns about housing
supply in Dublin.
In a policy document aimed at helping bring about a
sustainable recovery in the construction sector, it said local
authorities in Dublin were already working to identify housing
developments capable of being delivered in the short-term.
(Reporting by Padraic Halpin; Editing by Catherine Evans)