AIB has quashed wide-spread speculation about a possible house price collapse, claiming the Irish market exhibits "none of the signs of a bubble about to burst."
In a report released earlier today, the bank's economists stated that while the market remains vulnerable to any withdrawl by investors, demographic trends and inward migration continue to underpin strong demand.
The upbeat comments contrast slightly from research issued yesterday by Davy stockbrokers, which warned the cost of servicing a mortgage is escalating and predicted that the percentage of income needed to pay down personal debt would continue to soar to record highs by the end of the year.
In their report AIB economists, Mr John Beggs and Ms Jenny Pollock, ruled out any prospect of a house price crash and claimed any risk of negative equity "on any meaningful or material scale is small."
However, a moderate decline in house price inflation to around 7 per cent is expected as supply levels increase throughout the year.
The report cautioned the need for a "moderation in housing output" if the market is not "to become vulnerable to excess supply."
It said the "increasingly large proportion of housing supply has been absorbed by second, vacant or replacement of obsolete homes" but warned over the "medium term ...demand for 'holiday homes' is likely to decline."
AIB singled out the buy-to-let market as one area that "has the potential to "exert downward pressure on prices" and said "anecdotal evidence on the strength of investor demand, the trend in rental income and the state of the letting market for residential properties should be closely monitored."