result of brexit could add to demand, although brexit could also have a negative effect, in particular on retail commercial real estate if consumer sentiment is adversely affected. existing commercial real estate exposures leave irish retail banks vulnerable to any change in market conditions. house price growth has been rising steadily since late 2016, while survey data show further price increases being expected over the medium term. high rental growth is also being observed. a scarcity of housing in certain locations is contributing to price and rent developments in the residential property market. there has been a substantial decline in vacancy rates in recent years, particularly in high population growth areas. the number of residential properties listed for sale or for rent is also low. there is some uncertainty surrounding official housing completion data at present but the number of new units being built and likely to be constructed over the medium term is below demand. the central bank introduced macroprudential mortgage - lending requirements in february 2015. the outcome of a review of these requirements was announced in november 2016 and found that the regulatory framework is appropriate and effective in meeting the objectives of the measures, which are to strengthen households ’ and banks ’ resilience to shocks and to curb price - credit spirals in the housing market. we have committed to review the measures on an annual basis. the general government deficit ratio continues to improve and the medium - term deficit target is projected to be achieved in 2018. the public debt burden, at around €42, 000 per person resident in the state, however, remains high by historical and cross - country comparison, leaving the sovereign vulnerable to real economy and financial market shocks. looking at the financial sector, irish retail banks ’ profits, while remaining positive, fell in 2016 as a substantial reduction in the write - back of impairment provisions occurred. operating income increased last year, with the domestic market accounting for almost 80 per cent of revenue. brexit could adversely affect those irish retail banks with a significant presence in the uk. new lending to the uk fell by over 18 per cent in the twelve months to 2017q1, with a drop in uk mortgage lending and exchange rate movements contributing. irish retail banks ’ aggregate loan book has become more concentrated in recent years in residential mortgages and in lending to irish counterparties. developing a sustainable model to address declines in their main income sources and the eventual normalisation of interest rates represents a challenge for irish retail banks. 2 / 3 bis central bankers'speeches the aggregate value of total assets held by

is increasing, year - on - year growth in bank credit to both the household and non - financial corporate sectors remains negative. against this background, the countercyclical capital buffer ( ccyb ) rate on banks ’ irish exposures is maintained at zero per cent. the countercyclical capital buffer ( ccyb ) is a time varying capital requirement which applies to inscope banks and investment firms. it is designed to make the banking system more resilient and less pro - cyclical. essentially the ccyb will increase the capital requirement of banks if we see credit growth becoming “ excessive ". it can then be released, partially or fully, either in the case of a period of systemic stress or when credit growth and associated systemic risks recede. the review shows that credit growth to smes remains negative across all sub - sectors as firms continue to deleverage. new lending to smes, however, has been rising since early 2014. a large decline in npl rates across all categories of sme / corporate loans has been evident in recent years, although more than 10 per cent of loans are non - performing and substantial sectoral variation in npl rates arises. 1 / 3 bis central bankers'speeches some categories of household credit are showing positive growth, including non - mortgage credit and mortgage lending at fixed rates. the overall rate of growth in mortgage loans remains negative as floating interest rate mortgage lending continues to fall. while household debt has been declining, the sector remains highly indebted, at €143. 8 billion in 2016q4, leaving it vulnerable to a rise in interest rates. those in the 30 – 44 age category have high debt - to - income ratios relative to other age cohorts and by international comparison. the overall number of mortgage arrears cases has declined by 44 per cent since 2013q2. almost half of mortgage arrears cases are in very long term arrears. turning now to the irish commercial real estate ( cre ) market, 2016 continued to see high total returns. the commercial property vacancy rate was 13. 5 per cent in 2016q4. it is much lower for the dublin office sector, at 7 per cent in 2017q1. a substantial amount of new office supply is under construction, being planned, or at pre - planning stage. the commercial real estate market has also seen a broadening of its investor base in recent years. the possibility of firms seeking to relocate to ireland as a