A new report on property has forecast a continued rise in house prices, contradicting the generally held view that the market is slowing down.
AIB Global Treasury says it expects close to 77,000 homes a year to be built until 2008. This is similar to last year's record level.
It adds that annual house price inflation should stay at a relatively high 7% in the same period. This compares with the bank's previous prediction of a slowdown to 2% growth by the end of 2006.
AIB cites exceptionally strong demand, particularly from first time buyers, and strong population growth as factors in the continuing strength of the housing market. 'The soft landing to price stability that we envisaged in our last report could be postponed until 2008,' it says.
AIB says affordability is 'comfortable' and will remain so even if interest rates rise by half a percentage point next year. But it warns against tax changes in the sector, describing these as the greatest threat to the sector.
The report also says that current high levels of housing output can be justified only on the basis of 'sustained sizeable net inward migration'.
