The chief executive of AIB has told the Oireachtas Finance Committee that Ireland is not in a property bubble.
David Duffy says while property prices are spiking in some areas they remain low in others and quickly rising prices in one area, such as Dublin 4, are not indicative of trends across the country.
Mr Duffy is appearing before the Oireachtas Finance Committee this afternoon.
He told the Committee that the shortage of houses in some areas should not be mistaken for a bubble:
“There is a very small number of properties in discussion here and in a very small sector that is really driving that perception,” Mr Duffy said.
“There is no doubt that you would get price anomalies because of the stock issues and that needs to be addressed. If you look around the broader country I don’t think anyone is having a Ballsbridge experience in West Cork so I think you have to keep the balance,” he added.
“We map to every single part of the geography the incremental prices and the stock and look at that as we look at our property strategy,” Mr Duffy said.
Mr Duffy said AIB believe a strategy of “sensible lending” combined with additional housing coming on to the market means that, in the “five to 10 year view of the economy” Ireland will not see a property bubble. Duffy predicted there would be “some volatility around stock shortage” but told the committee he believed this would give way to stabilisation.
Figures from the Residential Property Price Index, compiled by the Central Statistic Office, released in October, show Dublin property values are 23 per cent than one year previously. Apartments in the capital have increased in price by 35 per cent in one year.
Prices outside the capital are also rising, although not at the same rate. Excluding Dublin, house prices were 7 per cent higher in September this year than in September 2013.
Nationally, property prices rose by 1.8 per cent in September. The price rise for the year is 14.6 per cent higher than one year previously
The rate of growth in prices was seen to be slowing. Last month was the first time prices did not rise by two per cent or more since April 2013.
Property prices in Dublin are 37.7 per cent below peak levels in 2007. National prices are 44 per cent off the 2007 high.
