Irish house prices post first annual rise since crash

Irish house prices post first annual rise since crash

DUBLIN (Reuters) - Irish residential property prices have recorded their first annual rise since a property crash crippled the country's economy in 2008, a landmark in what has been an uneven recovery for the bailed-out country.

Property prices across the country increased by 1.2 percent in June, up from an annual fall of 14.4 percent in the same month last year and the first rise since January 2008, the central statistics office said.

Prices of Irish homes have fallen on average by 50 percent since the crash, losing almost 20 percent of their value in 2009 alone, leaving tens of thousands of households deep in negative equity from which some may never emerge.

The collapse of property prices sparked huge losses in the country's banks, forcing the government to inject tens of billions of euros in capital. That led to an 85 billion euro bailout of the state by the European Union and International Monetary Fund.

"This should provide a huge psychological boost for Ireland," said Alan McQuaid, chief economist at Merrion Stockbrokers. "Because the whole crash was down to property, seeing prices picking up sends a message to consumers that the worst is over."

The news comes after data last month showed the country had fallen back into recession for the first time since 2009, a blow to hopes the economy can grow fast enough to eat into Ireland's huge debt pile.

While weak exports have dragged down growth in recent months, the domestic economy has proved a little more resilient, with unemployment hitting a three-year low of 13.6 percent.

Most economists still expect the economy to post a third year of growth in 2013 and outperform most of its rivals on the euro zone periphery, according to a Reuters poll, and Ireland is widely expected to exit its EU-IMF bailout in December.

The recovery in residential property prices has been uneven, with demand in Dublin outstripping the rest of the country.

Prices in Dublin were 4.2 percent higher than a year ago, while properties in the rest of the country grew only 0.7 percent. Analysts say the split between the performance of urban and rural properties is even more dramatic.

By Conor Humphries

Source Reuters 23/07/2013