Record house prices forecast for this year
2006 will set new records in terms of house prices, completions and mortgage lending, Bank of Ireland said today in its quarterly analysis of the property market.
The bank's Irish Property Review shows the housing market is showing continuing strong levels of activity.
Towards the end of the year, however, the review predicts that the market will slow in price terms as affordability deteriorates in the wake of higher interest rates, although it asserts that it will be 2007 before the full impact of tighter monetary policy is felt in house prices and turnover.
The review attributes the current strong housing demand to the acceleration in employment growth (with 90,000 new jobs created in the 12 months to the first quarter of 2006), wage increases and the rapid pace of population growth.
BoI chief economist Dan McLaughlin said: "Prices have certainly risen at a surprising pace of late, particularly as the market appeared to be stabilising 12 months ago. Price inflation re-accelerated towards the end of last year and in 2006.
"On that basis, our previous forecast of a 9% price rise this year is too low and we are revising that up to 12%. This would put the price of an average house nationally at around €395,000, from €352,000 at end-2005, with Dublin prices at €532,000."
