John FitzGerald: Fears of surge in Irish house prices over next 18 months

Government should stop throwing petrol on the flames by giving more money to buyers

‘Given the exceptionally slow response of Ireland’s housing supply, there must be a real concern that house prices will surge here over the next 18 months.’ Photograph: iStock

‘Given the exceptionally slow response of Ireland’s housing supply, there must be a real concern that house prices will surge here over the next 18 months.’ Photograph: iStock

A key factor in the financial crisis was the exceptionally risky behaviour of banks’ lending to property developers and to households.

In turn, there was an abject failure by the Central Bank to ensure that banks did not take excessive risk, and also to ensure that borrowers did not bite off more than they could chew through excessive mortgages. The splurge of lending drove house prices to unsustainable levels by 2007. The rest is history.

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