The latest review of the property market from Bank of Ireland suggests that the average house price nationally will climb towards €400,000 by the end of this year. This figure is much higher than earlier reports had predicted.
The bank's Irish Property Review forecasts that 2006 will set new records for house prices, house building and mortgage lending, though price growth will slow towards the end of the year.
Economist Dr Dan McLaughlin said he was raising his forecast for price growth this year from 9% to 12%, attributing the acceleration in prices this year to employment growth, strong wage increases and rapid population growth. This would bring the average price nationally to €395,000, with an average of €532,000 in Dublin.
He also forecast that 90,000 homes would be built this year, up more than 10% on last year. But the economist suggested that house price growth would slow to 3% in 2007, as euro zone interest rates climbed to 3.5%.
Lynda Carragher of Bank of Ireland Mortgages predicted that last year's record of 108,000 mortgages paid out would rise to 120,000 this year, resulting in total new mortgage lending of €26.5 billion, more than €5 billion ahead of 2005.
