House prices set to grow by 6%

HOUSE values are expected to grow by 6% this year, fuelled by buyers taking out 87,500 new mortgages to borrow €15.4bn by year's end, according to Bank of Ireland's latest property review.

Yesterday, it reaffirmed its view that house prices will increase by close to 6% this year, having already clocked up a 2% increase in the first three months of 2004.

Bank of Ireland Group chief economist Dan McLaughlin said the property market will remain buoyant with yet another year of record supply. In the review, Mr McLaughlin revised his housing completions' forecast upwards to 70,000 for the year, which would result in a further 5% gain to Ireland's housing stock. The review's authors believe the pace of house price inflation is slowing for a number of reasons and point to the massive building programme which Bank of Ireland said is unprecedented in the western world. House price affordability, which has deteriorated, albeit not to unduly onerous levels, is also slowing inflation in the sector.