House prices and mortgage lending set to accelerate

Goodbody’s quarterly health check note Republic’s ‘strong economic momentum’

The price of a house is set to go up by 10 per cent this year according to a forecast from stockbroker Goodbody. The company’s latest quarterly health check on the State’s economy suggests that greater-than-expected demand has led to them increasing their forecast on house price growth.

In response to the expected growth of house prices, new mortgage lending is also set to increase to more than double the 2016 out-turn. Goodbody expects €13.5 billion in new mortgage lending in the medium-term over the next few years.

These developments appear "against a backdrop of strong economic momentum" according to a statement from the company. Goodbody expects core domestic demand to grow by 3.7 per cent in both 2017 and 2018, which would keep Ireland at the top of the European table.

The biggest external risk to Ireland is still Brexit. However, while there is a high likelihood that the UK will fall out of the single market and the customs union, Goodbody expects some transitional arrangement to be agreed which would cushion the blow in the short-term. Another major risk at the start of the year was the threat of large-scale US corporate tax reform, although this appears to have abated according to the stockbroker.

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Goodbody has reiterated its positive short-term outlook for the Irish economy due to the fact that the Republic continues to be the fastest-growing economy in the euro area. While the company admit international risks that existed at the beginning of the year are still around, they say that there have been more favourable developments from an Irish point of view on this front.

Peter Hamilton

Peter Hamilton

Peter Hamilton is a contributor to The Irish Times specialising in business