DAVY VIEW

We have raised our forecast for Irish house price inflation to 4% in 2023 (3% previously) due to the Central Bank of Ireland’s decision to loosen the mortgage lending rules. We believe the Central Bank’s estimates that the rule changes will eventually add 8% to Irish house prices are plausible and potentially conservative. There is clear upside risk to our forecasts for 4% house price inflation that first-time buyers act more aggressively to take on additional leverage than the gradual process we have assumed.