State ahead of EU in housing price rises

Housing price rises in Ireland have outstripped the rest of the European Union over the past 20 years.

A study also shows that problems with the rental sector risk undermining the economy of the EU.

The report, Structural Factors in the EU Housing Markets, published yesterday, says price sin Ireland have risen by 3.7 per cent a year between 1980 and 2001. Other member-states have seen growth rates over the period of 3 per cent or less.

It notes that, while mortgage debt has risen substantially in recent times, the ratio of the cost of servicing mortgage debt to income has remained basically unchanged in the latter partof the decades.

The report calls for a review of the bias in tax reliefs and subsidies which favour owner occupiers across the EU. Rented housing as a proportion of the housing stock has fallen by a third in Ireland since 1980.

Already low by EU standards, the rental sector now accounts for just 16 per cent of housing stock, a figure higher only than that in Spain.

Rents in Ireland have risen by an average of 7.9 per cent between 1997 and 2001, well ahead of the average rate of inflation over the same period of 3 per cent. Rents jumped by 14.4 per cent in 2001 amid the Government clampdown on property investors.