Before the crash, Ireland’s turbo-charged economy earned it the nickname the “Celtic Tiger.” Then came the dark days of crushing debt, deep recession, and an international bailout. Now, the country’s rapid recovery has people calling it the “Celtic Phoenix.”
Nowhere is this more apparent than in house prices—new data out today shows that the average Irish house rose by more than 16% in value in the year to October:
That rate was bested only during the heady days of 2006. And prices are even perkier in Dublin, where the average home gained 24% in value last month. That’s a bigger annual rise than even in the internationally-accepted benchmark of property-market insanity, London:
What gives? The story is similar to London, in some ways—a lack of supply is inflating prices, attracting hot money in search of a quick return. Although the government won’t complain about the boost in property taxes as a result of increasingly frenzied buying and selling, concerns are rising about the large swathes of the local population priced out of the housing market.
With a huge number of homeowners still well behind on their mortgage payments, the recent surge in prices is stoking talk of another dangerous housing bubble in the Emerald Isle. The bursting of the country’s last bubble pushed it into an €85 billion ($106 billion) bailout, which it only exited less than a year ago.
Ireland has recovered smartly since then—it is expected to be be the fastest growing economy in the EU this year and next—but this is made easier by the depths of its downturn. The Irish economy won’t regain it’s pre-crisis peak until 2016 (pdf), and even after the recent surge property prices remain well below the Celtic Tiger days. People who bought a place in Dublin recently are sitting on juicy gains, but there are many more who have yet to get a meaningful boost from the so-called Celtic Phoenix.