In a new study on the Irish housing market, Goodbody Stockbrokers says that housing market output has not yet peaked. It predicts a total of 80,000 house completions this year, with a level of 85,000 for next year. This should slow to 72,000 in 2006.
Goodbody's report says that a soft landing is still a distinct possibility for the housing market here. Pointing out that house prices have risen by 80% in the past five years, it says that though they have enjoyed uninterrupted gains and output has exceeded all expectations, affordability still remains within acceptable limits at the moment.
The report says that while risks still remain to the housing market, these do not appear to make the market vulnerable in the short term. Goodbody says that the current pace of mortgage credit growth (27.4% year on year), and house price inflation (12% year on year) are the most significant risks.
It adds that the apartment sector is facing significant risks because of the presence of investor demand and the aging of the population.
The stockbrokers say they feel that a modest increase in interest rates will be positive for the stability of the Irish housing market, as it will trigger the needed slowdown in credit buildup.
Meanwhile, figures from the Department of the Environment & Local Government today show that 54,170 housing units were built in the first nine months of this year, up 13.4% on the same period last year.
Economists have been predicting that completions this year will beat last year's record of 69,000. Yesterday, Davy Stockbrokers predicted a full-year figure of 77,000.
The latest Housing Statistics Bulletin also shows that new house prices in the second quarter of this year rose by 3.5% compared with the first quarter. The annual rise was 10.7%. Second-hand prices rose more quickly, with a 10% quarterly rise and 12.7% annual rise.
