Second-hand house prices are likely to show an increase of 15 per cent by the end of the year, the State's largest estate agent predicted yesterday.
Sherry FitzGerald Group's chief economist, Ms Marian Finnegan, said second-hand house price inflation was running at 16.3 per cent in the year to the end of June.
The estate agent maintained that the rate of increase had slowed during the previous three months. In the 12 months to March 31st, it stood at 20 per cent.
Ms Finnegan last night forecast continued strong growth in the market for the rest of the year, but said the actual rate of increase would cool slightly.
"Current trends would suggest that we can anticipate further stabilisation in the pace of price inflation during the remainder of the year, with the year-end figure likely to reach 15 per cent," she said.
While Sherry FitzGerald's figures relate to second-hand houses, its end-of-year figure is ahead of forecasts made by the State's biggest mortgage lender.
Permanent TSB this week raised its forecast for the overall increase in house prices from just under 10 per cent to 13 per cent. The bank based its prediction on a surge in mortgage lending.
Central Bank lending figures released during the week showed there was a €942 million increase in the amount of money Irish banks and building societies loaned out in mortgages. The increase in homeloans contrasted with the demand for other credit, which remained stable.
The continued high demand for mortgages increased Central Bank concerns about the lending policies pursued by Irish banks and building societies.
The Bank has already begun inspecting homeloans to ensure that the institutions are not granting mortgages outside its lending criteria - that is, loans which customers may not be able to repay.
Sherry FitzGerald yesterday said the average price of a second-hand property in Dublin rose by 3.1 per cent during the second quarter of the year. The increase brought inflation in the capital for the first six months to 9 per cent.
In the State as a whole, second-hand house price inflation was 3 per cent in the second quarter and 9.9 per cent in the six months to the end of June.
First-time buyers bought one in every three houses on sale.
Sherry FitzGerald said investors were also active, snapping up almost 20 per cent of the second-hand properties on the market.
Ms Finnegan said that, after a strong start, inflation had moderated as "lagging" demand from 2002 eased and new houses came on line.
"That said, the impact of the falling interest rate is continuing to fuel above-trend levels of inflation throughout the country," she added.
