Positive outlook for housebuyers

RESIDENTIAL property investors are on a slippery slope but the outlook for prospective housebuyers is positive, according to research from Bank of Ireland.

The bank’s latest review of the property market, which was published yesterday, predicted house prices would grow by just 5% in 2005. This would be the first time in 10 years that the rate of house price inflation would be less than increases in wages and salaries, the bank said. Such an outcome would mean houses would be more affordable at the end of the year than they are at present.

Bank of Ireland chief economist Dan McLaughlin said last year may have been a watershed for the Irish housing market and that the days of runaway house price inflation were in the past. “House prices in Ireland are finally responding to the scale of supply, and the era of double-digit house price inflation may well be over,” said Dr McLaughlin. Supply of new housing would remain close to record levels at 74,000 new units in 2005, down slightly from 77,000 last year.