Growing population to drive economy
The study by NCB Stockbrokers says the economy will grow by 5.75% a year up to 2010, dip to 5% over the five years to 2015 and slow to 4% in the period out to 2020.
Driving that boom will be our relatively young population and the continued impact of immigration.
NCB contend the growth in population from 4.1 million to 5.3m by 2020 and to 6m by 2050 will have a powerful influence on how the economy performs.
In that mix the growth in the number of immigrants to 20% of the population will also play a major role.
Over the next 15 years the 15-64 age group is set to grow by 700,000 to 3.5m and that, coupled with sustained growth in labour supply and continuing productivity gains, should generate economic expansion at least double EU growth over the same period, the report concludes.
The housing market is not about to wither away either, says the report.
It expects the market to produce 80,00 homes again this year, and to achieve an average growth of 65,000 houses per year for much of the period out to 2020.
The key argument is that people need a place to live.
So do immigrants and figures from the report suggest the immigrant population to have around the same density of 2.9 people per household as the rest of the population, suggesting every three immigrants creates demand for one dwelling.
House prices should soften, but NCB says it expects the average price to go up 11% this year and growth to fall to closer to 6% next year as supply and demand converge. House repayments could rise to 34% of disposable income as interest rates move up.
NCB senior economist Eunan King, co-author of the report, said the level of repayments should still be manageable, although people who have overstretched themselves may struggle.
Pockets of people under pressure would not be enough to undermine the market, which NCB says is under pinned by the upward movement in population.
Car ownership is also set to go through the roof and will double to over 3m by 2020. Over 60% of all journeys to work are now done by car and that is on the increase despite efforts to entice people to use public transport.
The most up-to-date figures cover 2002 and show 70% of the 15.3m miles travelled to work each day were done by car drivers, up from 67% in 1996.
