Davy Stockbrokers has revised upwards its growth forecast for the Irish residential market this year, from 5 per cent to 7 per cent, on the back of the new first-time buyer incentive and a tighter housing market.

In a note on Tuesday the stockbroker said it expected Irish property prices to grow 7 per cent in 2017, 6 per cent in 2018 and 5 per cent thereafter.

“This follows stronger-than-expected price movements in 2016, a tighter housing market and the new ‘help-to-buy’ scheme which provides homes-buyers with a 5 per cent tax rebate” said economist Conall MacCoille.

Mr MacCoille expects Ireland’s first-time buyer incentive, which offers home-buyers a rebate of up to 5 per cent of the purchase price of a new build, to have a broader take-up than a similar UK scheme, which provided a 20 per cent equity loan on purchases of new build properties. This scheme had limited take-up, with just 72,000 equity loans granted up to September 2015.

Borrowers

Department of Finance

estimates however, suggest that the Irish scheme could reach a minimum of 2,500 borrowers, or over 10 per cent of the mortgage market. If the average tax rebate is € 10,000, the Mr MacCoille says the department’s costing implies that 5,000 borrowers could avail of the scheme.

Davy also expects growth in the mortgage market, and is forecasting lending of €5 billion in 2016, €6.2 billion in 2017 and rising to €10.2 billion by 2020, provided that home-building rises towards the 25,000 units a year which has been deemed necessary to satisfy natural demographic demand.