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Boom time again... but what have we learned?

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The new office block development on the corner of Stephen’s Green and Harcourt street

The new office block development on the corner of Stephen’s Green and Harcourt street

The new office block development on the corner of Stephen’s Green and Harcourt street

The boom times are back, apparently, but for how long? The property market has exploded in the past year as a sector that was basically dead since 2008 miraculously resurrects.

House prices have jumped 25pc in the past year in Dublin and 13pc nationwide. In the commercial sector, it has been even busier with €5bn worth of deals done this year. NAMA sold a site on Dublin's docks last year for €8m. In August, it changed hands for €18m.

But is this real? Seven years ago the experts said that if prices stopped rising, then we would at least have a "soft landing".

Then the music stopped, and things got ugly very, very quickly. So what has changed? Are things really "different this time"?

Marie Hunt of property firm CBRE believes the recovery is fundamentally different to the boom.

"It is important to put [the increase in prices] in context of the unprecedented decline in values experienced after the credit crunch when commercial property values more than halved.

"The recovery in the last 18 months is off an extremely low base with values still considerably off their previous peaks."

Hannah Dwyer of JLL agrees. "Although the pace at which prices have increased has been strong, further growth is expected, as values remain 44pc lower than the peak of the market," she says.

Savills' John McCartney echoes those comments, and notes that the economic recovery means people, and companies, are willing to spend more than they were even a year ago.

The key difference this time around though, is that practically nothing is being built at the moment. Unlike the last decade, when it seemed a new office block or housing estate was being opened every week, these days there are still very few of the tower cranes which dominated the skyline in the old days.

Now there is a shortage of suitable property for first-time buyers and expanding companies.

That pent-up demand, especially in residential, may not last long. An exemption on capital gains tax will expire at the end of this year, combined with the Central Bank's plan to limit mortgages to 80pc and three-and-a-half-times salary are likely to cool the market, believes Savills' Mr McCartney.

Irish Independent