particularly so in dublin. for example, the percentage of respondents expecting national house prices to increase over the next three years has declined by 14 percentage points. the share expecting prices to rise in dublin over the next three years is down over 17 percentage points. furthermore the extent to which prices, nationally and in dublin, are expected to increase is notably lower than in similar surveys carried out in the second half of 2014, with national prices for one year and three years ahead expected to increase by 5 and 10 per cent respectively. the corresponding figures for 2014q4 were 8 and 15 per cent. nonetheless, it is important to note that at 5 per cent, house prices are expected to grow faster than inflation generally in the next year, implying that there is still plenty of demand for housing. the suggestion that macro prudential measures can mitigate speculative forces in the housing market is not new. the imf has presented an analysis on survey - evidence from korea, a country which has employed several forms of macro - prudential tools for some years. 7 its igan and kang ( 2011 ). bis central bankers ’ speeches analysis indicates that tightening ltv caps reduces households ’ expectations of price increases. despite these shifts of house price expectations, current credit availability in ireland appears to be largely unaffected in the first half of the year. while it is too early to assess precisely the short - term impact of the measures, data on the volume and value of mortgage drawdowns from the banking and payments federation ireland ( bpfi ) indicate an increase in mortgage lending in 2015q2, as do data on loan approvals, despite a slowdown in august. finally, property services regulatory authority data indicates that the level of property transactions has continued to grow in the first half of 2015. furthermore, any problems with the functioning of the property market highlighted by these measures are better addressed by policies in other areas. for instance, do building regulations impose unnecessary additional costs and thus constrain supply? 8 and to what extent is the demand for owner - occupied housing reflecting a poorly functioning rental market? clearly, permitting risky lending is not a good solution for problems originating elsewhere in the housing market. conclusion earlier this year, the central bank of ireland brought in macro prudential measures for residential mortgage lending. the motivation for doing so was to limit lending of the type that was shown to be particularly risky in the financial crisis, and thereby enhance the resilience of both households and banks. the measures were not very different

stefan gerlach : the central bank of ireland ’ s macro prudential policy address by mr stefan gerlach, deputy governor ( central banking ) of the central bank of ireland, to the society of chartered surveyors ireland, dublin, 15 october 2015. * * * accompanying slides can be found on the bank of ireland ’ s website : slides ( pdf ). introduction1 it is a great honour to be here this afternoon and to participate in your annual conference. i am particularly pleased to have the opportunity to talk about macro prudential policy, which promotes something that we all desire – financial stability. the macro prudential policy measures that the central bank introduced some nine months ago – that is, the loan - to - value ( ltv ) and loan - to - income ( lti ) ratios for residential property lending – have been widely commented on. i think it is fair to say that, overall, the comments have been fairly balanced – they have been criticised by some observers but supported by others, although admittedly the critics may have gotten more play in the public debate. i think it is desirable that policy measures that the central bank takes are subject to public debate. it is also fully proper that we in the central bank are asked to explain the background and rationale for the decisions that we take, so invitations such as today ’ s should be accepted eagerly. background it is perhaps useful for me to start by recalling the background to the policy measures, which were introduced to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future. ireland experienced in the last decade a property boom - bust cycle of the most severe type. the aftermath has been protracted and painful. while the economy is now recovering strongly, public and private indebtedness remains very high and the return to growth is very much helped by the exceptionally low level of interest rates which help to reduce the burden of debt. one can ’ t help but worry about what would happen if interest rates rose sharply. during the boom, property prices rose extremely fast, increasing collateral values and reducing the perceived riskiness of mortgage loans. massive construction activity and heavy investment in housing and commercial property led to rapid economic growth, which reduced unemployment rates and in turn further reduced the perceived riskiness of mortgage lending. but we now know that lending standards slipped in a dangerous way during the boom. the subsequent downturn was