The latest Property Review from Bank of Ireland reveals that house prices increased by 2% in the first quarter of 2004. The bank reaffirmed its previous forecast that house price inflation will reach 6% by the end of 2004.
Bank of Ireland's Chief Economist Dan McLaughlin says the Irish property market will remain buoyant with yet another year of record supply. He revised his housing completions forecast upwards to 70,000 for the year, which would result in a further 5% gain to the country's housing stock.
'The level of activity in the market - including the number of mortgages, the scale of borrowing, the number of house completions, the flow of stamp duty - remains extremely buoyant, pointing to 2004 as yet another record year for housing,' he says.
The Review also notes that growth in mortgage debt in Ireland is showing no signs of slowing, with the debt amounting to €62.4 billion at the end of March, an increase of €3.2 billion over the previous quarter. This represents year over year growth of 26.9%.
'According to Central Bank data Irish debt levels relative to the size of the economy are in line with the EU norm, despite the extraordinary pace growth in recent years,' comments Joe Larkin, Managing Director of Bank of Ireland Mortgages. He says the average new mortgage last year was €160,000.
Today's review from Bank of Ireland says that any rise in European Central Bank rates are unlikely to have a major impact on the property market because of expected slow rate of increase.
The Property Review notes that during the first quarter of 2004, the price of new houses rose faster than existing houses, with a 3.9% gain in the price of new houses and 1.7% recorded for second hand houses. This represents a reversal of the inclination to date towards second hand housing.
The Review says it does not expect this trend reversal to continue due to the expectation that 70,000 new homes will come onto the market this year.
Figures from the first quarter also suggest a move to higher density accommodation. In 2003, 11.5% of new houses were terraced, up from 8.7% in 2003. 34.4% of new homes were semi-detached, up from 32.5% in 2002 while 21.7% completions were given over to apartments, compared to 20.3% in 2002.
Dublin accounted for 20.99% of completions in 2003, down from 21.9% a year earlier. The Review says that this trend suggests a relative housing shortage in the capital and surrounding areas.
