House price rises don't worry me, says Noonan
Ireland has to be careful but there is no need for concern about the pace of rising property prices, Finance Minister Michael Noonan claimed yesterday.
Ahead of a meeting of Eurozone finance ministers in Brussels, Mr Noonan said the recent increase in prices was "quite small" in proportion to the "massive drop" in the sector.
Dublin property prices climbed by more than 15pc in the 12 months to October, according to the latest official figures from the CSO.
Mr Noonan said the country was in the early stages of a restoration in the fortunes of the construction industry.
"Yes, obviously Ireland has to be careful," Mr Noonan said.
"But when you think that property prices dropped almost 55pc, the increase that there is in 2013 is quite small in proportion to the massive drop. There's no need for concern yet.
"We need property prices to be restored."
The State's budgetary watchdog, the Irish Fiscal Advisory Council, said last week that conditions were not akin to a property bubble.
A study released last month showed that each month, more than one-fifth of the disposable income of a first-time buyer couple in Dublin is spent on paying down the loan on their house, and that is set to gradually increase.
The latest affordability index by lender EBS and economic consultants DKM concluded that a couple earning about €75,000, and owning their first home in the capital, would have spent 22.4pc of their net income on their mortgage in September.
That's expected to rise to 23.7pc by the year's end.
And as two leading banks cut interest rates on investor mortgages, Mr Noonan said if the Central Bank was happy, he was too.
"We are at the very early stages of the restoration of the fortunes of the construction and building industry," he said.
"Rents in Dublin are going up, so to lend on favourable terms to the buy-to-let sector seems to me to be addressing a particular problem in the rental market.
"I would hope that would lead to the stabilisation of apartment rents, as extra apartments are provided.''