(Bloomberg) -- Ireland's home market is set to cool down, the nation's central bank governor said, as a renewed surge in prices stokes concerns about another bust.
Home prices increased 13 percent in the year to the end of April, the country's statistics office said last week, making it one of the hottest property markets in Europe a decade after the bust that devastated the economy.
Hottest Home Market in Euro Area Has Irish Lawmaker Feeling Pain
“What we have now is a strong market but we think over time as housing supply increases some of this will cool off,” Philip Lane, who is widely tipped to be the next ECB chief economist, said in a Bloomberg TV interview in Sintra, Portugal Tuesday. “We are putting risk management parameters in place so if there were any downturn in the future, there are cushions.”
Prices have increased 76 percent since early 2013, as the market recovers from a real estate crash which helped force the country into an international bailout three years earlier. The central bank has hinted in recent months it could the force nation's lenders to hold more capital to insulate themselves from any future downturn.
Lane emphasized that, for now, price growth reflected the economy.
“We are an economy that's growing quite quickly so employment is growing quite strongly and wages are picking up,” Lane said. “So when we talk about house prices there are some strong fundamentals there.”
To contact the reporter on this story: Peter Flanagan in Dublin at pflanagan23@bloomberg.net
To contact the editor responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net
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