The real estate bubble in Ireland. Policy context and responses

Abstract

The impact of surges and corrections in residential property prices has been a feature of many international economies in the past two decades and was pronounced as the global financial crisis evolved from 2007 to 2015. Many European states such as Spain and Ireland were severely affected by market corrections, having experienced major property-development surges in the decade to 2007. Factors associated with such surges include a rapid growth in housing demand both for occupation and for investment purposes, often supported by relaxed credit and monetary policy stances. Many jurisdictions, including Ireland, also experienced supportive fiscal regimes, which artificially boosted investment in property acquisition and development, and ineffective planning and zoning regulatory systems for major growth centres leading to sprawl-type patterns of development. Irish residential property prices were at the top range of such international price increases and corrections, with major consequences for the general economy and the property market. This article explores the policy context which shaped the boom and bust and the policy response in place for market recovery.