Property-related borrowing is growing at a much faster rate than total private sector credit, a new breakdown of credit data reveals. According to figures published yesterday by the Central Bank, the share of personal debt secured to housing is the second-highest in the EU.
Borrowing for real estate activity rose by €19.7 billion in the 12 months to last June, an increase of 65.5 per cent over June 2005. This compares to growth in total private sector borrowing of 27.3 per cent over the same period of comparison.
Total private sector borrowing in the period rose by €61.7 billion. Four-fifths of the rise was accounted for by increases in the three sectors of real estate activity, construction and house mortgage finance. This covers borrowing for the transactions relating to the acquisition or development of property other than owner-occupied dwellings, such as for the purchase of Jury's hotel in Ballsbridge earlier this year by developer Seán Dunne.
Of the 15 sectors covered in the data, 10 experienced rates of borrowing growth in excess of 20 per cent.
Continued strength in the house building sector pushed borrowing for construction activities up by €6.6 billion over the same period, a rise of 58.9 per cent year-on-year.
Investment by ESB for the upgrading and maintenance of its power stations contributed to a rise of €460 million in the amount borrowed in the electricity, gas and water supply sector, a rise over the 12-month period of 64.9 per cent.
The new figures also reveal that 80.2 per cent of personal debt is secured to housing, second only to the Netherlands which has an equivalent ratio of 89.5 per cent. The EU average is 70.3 per cent. Both countries also have the two highest EU share of household debt as a proportion of income.
The Central Bank is due to release private sector credit data for July next Tuesday and the breakdown of data released yesterday will accompany future such releases.
