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Property boom could be over
New Irish Government figures
on the housing market show the country’s property boom could have
peaked in 2006 and there are strong signals a sharp downturn in the sector
is well under way.
The Annual Housing Statistics Bulletin for 2006 reveals it was a record
year for house building with more than 93,400 houses and apartments built
during the year up more than 15 per cent on the 2005 figure.
But the report highlights the likelihood of a sharp downturn in new developments
during this year with a 21 per cent reduction in planning permissions
for new homes granted in 2006.
Combined with other recent reports on the housing market highlighting
falling property prices and reduced construction activity the figures
point towards a period of uncertainty in the industry.
Although the value of housing loans approved by banks and building societies
last year reached a record ?31.4billion the actual number of loans approved
fell by 4.5 per cent to 114,593.
The report also shows there was a dramatic tail-off in activity in the
second half of 2006 with the number of loans approved for both new and
second-hand homes down almost 30 per cent on the first six months of 2006.
The affordability of housing has also taken a negative turn with two-income
households paying out an average 31 per cent of their disposable income
on mortgage repayments in 2006 compared with a mere 25 per cent in 2003.
Given the likelihood of a further rise in European Central Bank interest
rates in the autumn a worrying trend is that 36 per cent of first-time
buyers last year took out 100 per cent loans on their homes.
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