New report predicts house prices could rise by 20% over next two years

The ESRI has also said that the Irish housing market is not overheating

New report predicts house prices could rise by 20% over next two years

Photo: Mark Stedman/RollingNews.ie

A new report is predicting house prices could rise by 20%, in real terms, over the next two years.

The research from the Economic and Social Institute (ESRI) says strong economic growth and the slow pace of house building will fuel price costs.

However, it also suggests the Irish housing market is not overheating - and properties are not over-priced compared to other countries.

The ESRI explains: "A cross-country comparison of price-to-income ratios and price-to-rent ratios supports the finding that the housing market is not currently overvalued relative to the demographic and economic context."

Kieran McQuinn from the ESRI is author of the report, and he explained: "[The findings are] mainly related to the improvement in economic conditions we see - and in particular the developments in the labour market, where we've seen a persistent fall in the unemployment rate over the last number of years.

"Given the apparent sluggish response of housing supply, when you have such strong demand-side factors, that inevitably means that prices are likely to continue to increase."

He added that housing is a key indicator for cost of living - and noted that if that continues to increase, there will be challenges in persuading people to move to Ireland and its cities.