The housing market is set for a soft landing, according to David Duffy of the ESRI.

Mr Duffy was speaking at a presentation on the housing market held to mark the fifth anniversary of mortgage lender Simply Mortgages.

The presentation was also addressed by Pam Woodall of the Economist magazine, who said that Irish property prices were overvalued by as much as 20 per cent.

Mr Duffy said that rising property prices had been justified by economic fundamentals and this would continue into the future.

"The labour market and rapid rises in personal disposable income will continue to support the property market," he said.

Mr Duffy said that those previously excluded from buying a house would be able to do so in the future and that this would help prices remain high.

He said the market would also be supported by falling rates of headship - the average number of persons per household - as well as by SSIA money entering the economy from next year.

But Ms Woodall said that Ireland's house prices were based on low interest rates and had reached unsustainable levels.

"House prices are seriously overvalued not just in Ireland, but also in Australia, New Zealand, the US and the UK. A 20 per cent fall in prices is likely over the next five years," she said.

Ms Woodall said that ratios of house prices to average incomes had reached historically high levels. She said housing market trends in Australia and the UK proved that house prices could fall, even without sharp rises in interest rates, and that even modest falls in house prices could impact on the economy.

"This is the biggest financial bubble in history," she said.