Galway is the most expensive place in Ireland to buy a house, while house price inflation in Ireland is modest compared to other major European countries, two separate studies published yesterday suggest.
One report suggests that interest rates would be significantly higher in Ireland had Ireland not joined the euro.
In its report The Outlook For The Irish Housing Market, Irish Intercontinental Bank (IIB) says that house prices have risen faster in Spain, France and the UK than in Ireland in recent years.
"Between 2002 and 2005, Irish house price inflation rose by just under 10 per cent on average. This is far lower than the roughly 16 per cent average gain recorded in Spain, the 15 per cent rise in the UK or the 12.5 per cent rise seen in France," IIB chief economist Austin Hughes said yesterday.
The report - published in association with the Irish Home Builders' Association - also suggests the response of the construction industry to growing demand prevented average house prices from rising a further €60,000 compared to present levels.
"If house building had not risen in recent years and, instead, remained at its 2001/2002 levels, I reckon Irish house prices could be as much as 20 per cent higher than they are at present," Mr Hughes said.
A separate study, Tracking The Tiger, published yesterday by Goodbody Stockbrokers, finds that house prices are higher in Galway than anywhere else in Ireland, when adjustment is made for lower income levels outside Dublin. Dublin ranks third after the south-east region, the study finds. It attributes some of the recent price growth to a higher take-up in long-term mortgages.
"One thing that can sustain affordability is longer-term mortgages. The amount of first-time buyers taking up longer-term mortgages has doubled. This frees up 6 per cent of disposable income for a working couple if you increase the term from 25 to 35 years," Goodbody economist Dermot O'Leary said yesterday.
He added that if recent house price trends continued, average house prices would reach their highest levels in 15 years, relative to income, by the end of this year.
