Bank of Ireland says the Irish housing market will continue to grow strongly this year, with mortgage lending set to rise by €2 billion to €19 billion.
The bank's quarterly property review attributes the continuing strong demand to employment growth, wage increases, low interest and inflation rates and tax relief introduced in the last Budget.
The bank's chief economist, Dr Dan McLaughlin, says the number of homes built this year is set to match 2004's record levels. He describes this rate of house building relative to population as 'unprecedented in the western world'.
Responding to recent concerns about debt levels, the economist said there was no cause for concern, as there were far more savers than borrowers in this country.
The BoI report says the outlook for interest rates means people can comfortably afford their mortgages. Dr McLaughlin does not see rates being cut, but says it is difficult to see a rates rise until 2006.
The property review points out that the number of planning applications for apartments is down 23% in the first three months of this year, saying this is probably a 'kneejerk reaction' to falling rents over the past two years.
