Editorial: Distorted housing market a real cause for concern
It is at least a year since the possibility of a 'bubble' developing in the housing market was first mooted, yet officialdom has been very slow to catch up with the causes.
What the latest surge in house prices shows is that the Irish property market is still not functioning properly and until we get that we are still in danger of an overheated market. This is particularly evident in the market in certain parts of Dublin. While the market has surged 22pc nationally, including a 10.6pc increase in May, when you take Dublin out of the equation the national rise was just 1.8pc.
This clearly proves it is a distorted bubble in that it is confined to houses in specific locations in the capital and, fortunately, is not yet a credit bubble with the banks giving out too much money in mortgage lending. There is also the flipside of any bubble in that for many people in negative equity price rises of this magnitude and the fact they have been able to pay their mortgage during the downturn will mean they're now out of that poverty trap.