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Concern About A Sharp Slowdown In The Irish Property Market Set To Grow

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"The Irish Examiner reports that concern about a sharp slowdown in the Irish property market is set to grow after new Government figures show a huge decline in the number and value of housing loans approved and paid out in the first three months of 2007.
Combined with other reports that have warned about a downturn in construction activity and the likelihood of a further interest rate hike, it appears uncertainty will continue to cloud the Irish economy.
Housing statistics published by the Department of Environment show that there was a 24.5% reduction in the number of housing loans paid out in the first quarter of 2007.
A total of 21,181 mortgages were drawn down during the period compared with more than 28,000 loans paid out in the last quarter of 2006.
The value of mortgages also fell dramatically over the corresponding period — down 31.5% to a little more than €4.8 billion. The value of all mortgages paid out in the previous three months was more than €7bn.
A similar gloomy picture emerges from the latest data on housing loans granted between January and March 2007. Although almost 24,600 loans were approved during the period, representing a 7% increase over the preceding quarter, the value of such mortgages fell by 8% to €6.4bn.
A year-on-year comparison shows that the number of approved loans fell by 22%.
The decline suggests that the era of soaring house prices is firmly at an end.
The fall-off in mortgage activity also appears likely to continue following indications by European Central Bank president Jean Claude Trichet last week that interest rates are set to rise again next month. Another 0.25% rise in interest rates would see rates peak at 4.25% for the first time since 2001.
Goodbody stockbrokers also announced last week that it had revised its housing output estimates downwards for the second time this year amid continuing unease about the economy’s dependence on the construction sector.
Fears have also been raised by the news that 12 construction-related firms have gone into liquidation in the past fortnight, while a receiver was appointed to the company behind a big housing development in Co Kilkenny last week.
Housing Minister Batt O’Keeffe remained upbeat about the health of the property market, although he admitted there were indications that there was some easing in housing activity.
“The housing market is evolving to a more balanced and sustainable growth pattern, particularly with regard to house prices and mortgage lending,” said Mr O’Keeffe."

Oh dear!

Is this credit tightening rapidly ?

Edited by Ash4781

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