Friday 22 March 2019

House prices here not overvalued despite 83pc jump since the crash - EU report

Measures: The report says Paschal Donohoe’s decision to hike VAT in tourism area was a positive. Photo: REUTERS
Measures: The report says Paschal Donohoe’s decision to hike VAT in tourism area was a positive. Photo: REUTERS
Kevin Doyle

Kevin Doyle

Irish house prices are not overvalued despite rising by a massive 83pc since the economic crash, an EU Commission report has found.

In its latest assessment of the Irish economy, it has given a broadly positive message about the country's direction.

However, there is a warning that multinationals could squeeze the life out of smaller domestic businesses by snapping up all the good managers.

It also says Ireland is failing to tackle climate change.

On housing, the report states: "House prices have been growing at a rapid pace for a number of years, but have slowed down recently.

"House prices are largely driven by supply constraints and there is no clear evidence of overvaluation."

It acknowledges that the Government has implemented a range of measures aimed at tackling the under-supply of housing but "results will take time".

"Housing supply is rapidly recovering from very low levels but is still falling short of demand," adds the report.

"As a result, house price inflation remains high, even if it has recently moderated."

The report comes as latest homeless figures show there were 9,987 people in emergency accommodation in January - an increase of 234 people from December.

Housing Minister Eoghan Murphy acknowledged the situation was "very disappointing"

Elsewhere in its study, the EU Commission remains concerned the Government is relying on volatile corporation tax to fund services.

"The performance of the Irish economy is increasingly dependent on the activities of a limited number of foreign firms," it said.

It described the 4.5pc tourism Vat hike as the "biggest positive" from Budget 2019 on the basis that the move helped widen the tax base. But it added that other measures implemented by Finance Minister Paschal Donohoe "actually go in the other direction".

Irish Independent

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