Immigration and income growth will sustain demand for new housing and support property prices, according to a report published yesterday by NCB.
Separately, independent mortgage group IFG said a study it conducted indicated the amount being drawn down by non-nationals for property purchases in Ireland had more than doubled in the last year.
Eunan King, senior economist at NCB, said between 50,000 and 70,000 homes a year would need to be built over the next 15 years to satisfy demand. He believes immigration will accelerate because of the freedom of access for citizens of the 10 accession states. Currently, immigration is running at 11,000 people per year.
Mr King says there may be a "surge" in immigration from the new EU states in the coming years, given Ireland's relatively high economic growth rate.
In his report, he adds that increasing wealth is also supporting investment in second homes, with more than 10,000 second homes now being built each year.
The NCB report is optimistic on debt levels, saying the rise in debt is sustainable as it comes from a low base. Mortgage debt amounts to only 25 per cent of the value of the State's housing stock, Mr King says. The report estimates that mortgage repayments equalled 31 per cent of disposable income last year, and notes that even a doubling of euro-zone interest rates to 4 per cent would still leave this figure below 35 per cent.
Mr King, in his report, says the number of people aged over 25 will continue to grow and, by 2011, will be increasing at a rate of more than 50,000 per annum. A critical issue will be the pace of immigration.
The price of housing has risen significantly in recent years, but declining interest rates and rising incomes have offset most of the burden of servicing mortgage debt. Mr King points out that mortgage debt as a proportion of the value of a house declines rapidly even with modest house price inflation.
IFG Mortgages said a study using data from its agents showed non-nationals would draw down €52.3 million in mortgages this year, compared to €22 million last year.
The number of mortgages drawn down would be 264 this year up from 117 last year. It noted that non-nationals tended to save deposits - rather than receive assistance from relatives - and tended to be thorough in examining the mortgage being offered.
