More Evidence of Ireland's Housing Revival

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Ireland's residential property market, one of the hardest hit by the economic downturn, is showing signs of a robust revival.

The real estate industry's resurgence led to a jump in Ireland's total construction in September, marking the first increase since 2007, according to data released this week.

The Ulster Bank Construction Purchasing Manager's Index increased to 55.7 from 49.7 in August, moving higher than the 50 line which divides expansion from contraction. Total construction was spearheaded by housing development. 

"Housing was again the strongest sub-sector, as activity expanded at its fastest pace since December 2005 following a third consecutive above-50 reading," Simon Barry, Ulster Bank chief economist for Ireland, said in the release. "The September results show that the nascent recovery in activity levels is producing a stabilization of employment among survey respondents."

A construction boom in the country at the turn of the century was fueled by residential development, led by easy lending. But the market crashed when the lending stopped during the crisis. Housing prices in the country posted one the largest declines in the world, falling more than 50 percent in some areas. 

But now the residential market is gaining momentum. Home prices rose for the fifth consecutive month in August. Prices rose 0.9 percent in August and were 2.8 percent higher than in August 2012, according to the Central Statistics Office.

Home prices in Dublin were 10.6 percent higher than a year ago.

"There is no doubt that lack of supply has driven Dublin house prices up," Alan McQuaid, chief economist at Merrion Capital, recently told the Wall Street Journal.

The Ulster Bank survey also showed an increase in commercial property. New construction business grew for the third month in a row in September, the fastest pace since November 2006.

Looking forward, the survey shows optimism for the 12-month activity outlook, which jumped to the third-highest in the series history.

The country could be the first euro zone country to exit its EU/IMF international bailout by mid-December, Reuters reports.