House prices increased by 2 per cent in the first quarter of the year and are on course for an annual rise of 6 per cent, according to the latest Property Review from the Bank of Ireland.
The market is set for another record year, according to the review with new housing completions forecast at over 70,000. This would increase the State's housing stock by 5 per cent, he said.
Consumer appetite for mortgage borrowing remains exceptionally strong, with lending institutions having €62.4 billion loaned out for mortgages at the end of March. This was an increase of €3.2 billion on the previous quarter and contributed to a 26.9 per cent year-on-year rise in mortgage borrowing.
Mr Dan McLaughlin, Bank of Ireland chief economist, said: "The level of activity in the market - including the number of mortgages, the scale of borrowing, the number of house completions, the flow of stamp duty - remains extremely buoyant, pointing to 2004 as yet another record year for housing.
The review says that Central Bank data demonstrates that Irish debt levels are in line with the EU norm based on the relative size of the economy. Bank of Ireland said the average new mortgage in 2003 was 160,000.
According to Central Bank data Irish debt levels relative to the size of the economy are in line with the EU norm, despite the extraordinary pace growth in recent years,' comments Joe Larkin, Managing Director of Bank of Ireland Mortgages. He says the average new mortgage last year was €160,000.
The impact of interest rate rises from the European Central Bank are unlikely to have a significant impact on the Irish property market because the interest rate rises are expected to slow, the review suggested.
The study also found that the price of new homes increased faster than second hand houses, growing by 3.9 per cent, compared with 1.7 per cent respectively.
The Review says it does not expect this trend reversal to continue due to the expectation that 70,000 new homes will come onto the market this year.
The number of house completions in the greater Dublin area declined slightly in 2003, dropping to 20.9 per cent, from 21.9 per cent the previous year.