Irish property bubble

The Irish property bubble was the overshooting part of a long-term price increase of real estate in the Republic of Ireland from the late 1990s to 2007, a period known as the Celtic Tiger. In 2006 the prices peaked at the top of the bubble, with a combination of increased speculative construction and rapidly rising prices; in 2007 the prices first stabilised and then started falling until 2010. By the second quarter of 2010, house prices in Ireland had fallen by 35% compared with the second quarter of 2007, and the number of housing loans approved fell by 73%.

The fall in domestic and commercial property prices contributed to the post-2008 Irish banking crisis. House prices in Dublin, the largest city, were at one point down 56% from their peak and apartment prices down over 62%.

For a time, house prices returned to 20th century levels and mortgage approvals dropped to 1971 levels. As of December 2012, more than 28% of Irish mortgages are in arrears or have been restructured and commercial and buy-to-let arrears are at 18%.

Since early 2013 property prices in the country have begun to recover with property prices in Dublin up over 20% from their nadir.

From 1991 to 2001, Ireland's real gross domestic product (GDP) growth averaged above 7% and there was a large expansion in the workforce. From 1990 to 2000, the Irish gross national product (GNP) per capita rose 58%, bringing it above the European Union average. The pace of expansion in lending to households from 2003–2007 was among the highest in the Eurozone, with German banks having US$208.3 billion in total exposure to Ireland. These factors led to house prices increasing by 17% between May 2000 to May 2001 alone. In August 2000, an International Monetary Fund (IMF) report contended that Irish property prices were almost certainly heading for a collapse in the medium term since "no industrial country in the last 20 years had experienced price increases on the scale of Ireland without suffering a subsequent fall". From 2000, approximately 75,000 housing units were built every year as detailed by the Department of the Environment, Community and Local Government with sufficient planning permission being granted so that by 2005, there was enough zoned land to accommodate 460,000 new homes as housing density figures continued to rise each year. House prices went on to more than double between 2000 and 2006, with tax incentives being a key driver of this price rise. The Fianna Fáil-Progressive Democrat government received much criticism for these policies. In 2004, the independently produced Review of the Construction Industry, commissioned by the Department for the Environment, estimates that 12% of the workforce were employed directly in the construction industry.

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