Irish house prices will rise more than previously thought this year amid evidence of strong demand and expectations interest rates will stay lower for longer, economists predict.
A Reuterssurvey of 10 Dublin-based economists, published today, showed house prices in Ireland are expected to grow by 6.65 per cent on average in 2005.
In last month's survey, the same economists had predicted 5.5 per cent growth.
Six out of the 10 economists surveyed revised their house price forecasts upwards.
The other four left theirs unchanged. Forecasts for most other key indicators such as consumer price inflation (CPI) were little changed in the January poll compared with December.
The cost of buying a home in Ireland grew by around 12-14 per cent a year between 2002 and 2004 following an economic boom in the late 1990s that left housing supply struggling to meet demand.
House prices are expected to be a key driver for the economy in coming years as homeowners enjoy increasing wealth from the rise in property values.
Economists expect house prices to grow more slowly this year because the number of homes on offer has started to catch up with the number being sought.
But sentiment had also been seen as a factor behind the expected lower growth. House buying hunger was expected to abate after a feeding frenzy in the last few years.
In fact, that may not be the case. "I think consumers believe the economic outlook is going to be quite good," said Mr Danny McCoy at the Economic and Social Research Institute.