Consumers believe property values will increase
Jane O'Sullivan, Markets Correspondent
Irish consumers believe property values will continue to rise with seven out of 10 expecting house prices to increase over the next 12 months.
A new survey, carried out by IIB Bank and the ESRI, found that Irish consumers' view was one of "solidly grounded optimism" in relation to the property market.
It found that just one in five people expected house prices to remain flat over the next 12 months while as few as one in 15 expected house prices to fall over the coming year.
The survey, which was carried out in February, found that while confidence about the outlook for house prices had increased, it hadn't prompted unrealistic price expectations which could lead to a build-up of speculative pressure in the housing market.
Prices are expected to rise by 6.5 per cent over the next 12 months, representing a slight slowdown from the current pace of property inflation of around 8 per cent. Over the next five years, consumers see prices rising by around 5 per cent per annum.
"The survey results are doubly encouraging in that they suggest that Irish consumers expect the value of their houses will continue to appreciate but this greater optimism hasn't sparked unreasonable expectations of how quickly property prices might rise in the future," Tom Foley, executive director at IIB Bank, said.
According to the report, low interest rates and income growth are regarded as the key drivers of the near-term outlook for Irish house prices. But over a five-year period, underlying economic trends and population growth are expected to be more critical to market prospects than rates.
More than a quarter of consumers expect that economic trends will be the main factor driving house prices over the next five years.