However, this is largely explained by the fact that the fall in inflation over that period has allowed nominal interest rates to cycle around a lower average level now than was the case earlier. That is, lower interest rates have allowed households to take out bigger home loans, without increasing housing loan repayments (Graph 8).
In Ireland, and as outlined in our July Quarterly Bulletin (QB), the evidence suggests that economic activity has weakened as the year has progressed, tempering the strong post-pandemic recovery that had been underway. That recovery from the most severe aspects of the pandemic is most evident in the labour market, with the unemployment rate now at 4.5 per cent.