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Irish house prices expected to rise 8% in 2017

Davy stockbrokers in Ireland expects house prices in the country to rise by 8% this year fuelled by the Government’s help-to-buy scheme and a loosening of the Central Bank’s mortgage-lending rules.

The firm predicted the level of home-building and mortgage lending could also potentially double or triple over the next five to 10 years.

‘Our base case is that new mortgage lending will expand to €10bn by 2020. However, should residential transactions return to historic averages, similar to current UK levels, mortgage lending could triple to €15bn by 2020,’ the firm said in its latest economic outlook.

The Government’s new scheme for first-time buyers and the Central Bank’s decision to ease its lending rules would spur inflation this year and see an expansion in new mortgage lending for house purchases from €5bn to €6bn this year, it said.

Market demand is also underpinned by the resumption of net inward migration, which means household formation is now likely to exceed 30,000 per annum in Ireland.

However, in its report, Davy downgraded its growth forecasts for the Irish economy as a whole, citing softer export and manufacturing data linked to Brexit. It is now predicting GDP to expand by 3.7% this year, a slight revision on the previously forecast 4%.

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