The housing markets will continue to grow strongly this year with borrowers set to draw down €19 billion this year in mortgages, €2 billion more than in 2004, according to the Bank of Ireland chief economist Dan McLaughlin.
In the bank's quarterly analysis of the Irish property market Mr McLaughlin attributed ongoing strong demand for houses to rising employment and wage increases, coupled with low interest rates.
He noted too, that the stamp duty changed introduced in the last budget had contributed to strong demand for property.
Mr McLaughlin said the indications were that house building was set for another record year.
"Supply of this magnitude, relative to the scale of the Irish population, is unprecedented in the western world. Last year's 11 per cent increase represented an extra 76,954 units and contributed an additional 5.2 per cent to the Irish housing stock - clearly a challenge to those who claim that there is evidence of failure in the housing market," said Mr McLaughlin.
He also addressed concerns raised about the level of indebtedness. "There has been much speculation in recent weeks about the issue of indebtedness in Ireland.
"However, Bank of Ireland's experience gives no rise for concern and the records show that there are far more savers than borrowers in this country. At the end of 2004, household bank deposits stood at €53 billion, equivalent to over 70 per cent of outstanding mortgage debt."
According to the bank, house affordability remains "comfortable" , underpinned by the positive outlook for interest rates which Mr McLaughlin expects to stay at the fifty-year low of 2 per cent until 2006.
Mr Joe Larkin, managing director, Bank of Ireland Mortgages, said: "Some 99,000 new mortgages were paid out in 2004, a record figure and over 16 per cent above the preceding year. The average new mortgage rose by 7.5 per cent to €172,000, giving a total gross mortgage lending figure of €16.9 billion, up 25 per cent on 2003.
"The average income of borrowers in 2004 was some €61,500 and the median mortgage was €168,000, implying a multiple of 2.7, which hardly suggests an atmosphere of reckless or excessive borrowing by customers or by mortgage lenders," he said.