Ireland could be set for another property bubble, warns OECD

The OECD is warning that a strong rise in Ireland's property prices recently may boost construction activity in the short-term, but risks a return to another property bubble.

In its latest global economic assessment, the international think-tank says the Irish economy will grow by 5.6% this year.


"Strong property price rises may boost construction activity further in the short run but also risk sparking another spiral of higher property prices and credit," the report stated.

It also gave a broad backing to the €1.5bn stimulus package in the Budget, which it described as "reasonable as long as the public finances continue to progress towards the medium-term objective of eliminating the structural deficit."

It also said that the Budget should help get more people back into work "as those remaining out of the labour market still account for a large share of the working-age population".

But it has found "significant" risks remain, saying high debt levels leave the economy vulnerable.

"Debt repayment, however, is likely to keep the momentum of household consumption in check. Inflation will gradually rise on the back of the increasingly tight labour market," it stated.


 

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