Double-digit rise sparks calls for more homes to be built

House prices are rising at the quickest rate since the peak of the property boom seven years ago, latest official figures show.

Breaching the double-digit barrier, a more than 10% jump in residential property prices over the last year has sparked calls for more homes to be built - particularly in Dublin.

Lack of suitable housing in the capital – where prices have soared more than a fifth (22.4%) over the last year and 4.4% last month alone – has been blamed for driving up the national average price.

The latest Central Statistics Office (CSO) report reveals the average cost of buying a home nationwide rose 10.6% since May last year. It is the first time since the crash that house prices have been rising at double-digit levels.

Observers have warned cash-buying investors still make up around half off all property purchases, rather than people seeking a home and who have been able to get a mortgage.

Concerns have also been raised about first-time buyers putting themselves in danger of over-stretching themselves to get on the property ladder with the possibility of interest rate hikes in the future.

Rising rents, tax breaks, low interest rates and a renewed confidence in Ireland’s economic outlook is making property an attractive investment for those with money to spend.

House prices in Dublin remain more than 44% lower than peak prices at the height on the boom in February 2007. Nationwide, prices are 47% lower.

Peter Stafford, of Property Industry Ireland, which represents businesses working in the property and construction sector, said action is needed to tackle a lack of supply in housing.

“It is likely that, as in previous years, around 8,500 new properties will be built this year, far below our annual need of 25,000,” he said.

“Until measures are put in place to improve the supply of new properties in areas where they are needed, prices will continue to rise.”

Mr Stafford warned the lack of suitable housing would reap social as well as economic consequences.

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