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Property prices likely to rise thanks to ECB move - Savills

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ECB headquarters in Frankfurt

ECB headquarters in Frankfurt

Bloomberg

ECB headquarters in Frankfurt

The European Central Bank's decision to start quantitative easing will likely push up prices for both homes and commercial property.

Savills' head of research, John McCartney, told the Irish Independent the strategy would likely lead to the banks lending more for house buying. "One of the objectives of QE is to flood the banks with capital," he said.

"When that happens the banks will have put that money to work and much of that will go into mortgage lending so there would naturally mean more people will have the ability to buy houses, pushing demand up."

British families are also buying individual properties in Ireland as they take advantage of the favourable exchange rate, he added.

There may be a similar move in commercial property. QE should drive bond yields down and if that happens, investors will look for a greater return on their capital. Irish commercial property is seen as one of the best yielding asset classes in the developed world, as prices and rents rise sharply. PIBA's Rachel Doyle believes QE should force banks to reduce mortgage interest rates, which are among the highest in Europe.

Irish Independent