Bad news for first-time buyers: Cost of a home to jump 7pc this year, 5pc next year
Cost of a home to jump 7pc this year and 5pc in 2018
Shortages of housing in key areas will see property prices rising strongly this year and next.
Construction companies have been hit so hard by the crisis it will take a decade for building levels to reach the point of being able to meet housing demand.
A rise in disposable income, population growth and the Government's help-to-buy scheme will also boost demand, says ratings agency Standard & Poor's.
It expects prices to rise by 7pc this year, amid looser lending rules introduced last month by the Central Bank.
Prices will rise by 5pc in the following year, the international ratings agency predicts.
The strong property value gains will come despite households still being lumbered with large debts, a legacy of the property bust.
The collapse of the construction sector, and its slow recovery, has also restricted supply, pushing up demand.
"The Irish housing market remains impaired by crisis legacy issues. House price growth, however, should remain robust, underpinned by shortages in key areas, continued improvement in the labour market, and as help-to-buy and looser mortgage lending rules for first-time buyers are starting to have an impact," Standard & Poor's said in a new report on Europe's housing markets.
The help-to-buy tax rebate gives 5pc back to buyers of new homes, up to a limit of €20,000.
Central Bank rule changes mean that, from last month, first-time buyers only need a 10pc deposit to get mortgage approval.
Before that they needed a 10pc down payment for amounts up to €220,000, and a 20pc deposit for amounts borrowed over that figure.
Analysts at the ratings agency estimate that household consumption has now come close to, or surpassed, pre-crisis level.
The strong household spending comes on the back of a recovery in the jobs market. Real wages have also gone up, due to low levels of inflation.
"The boost to households' spending power, in particular in 2015 when economy-wide real disposable income rose by 4.6pc, helped underpin the robust upward trend in house prices," the report states.
Property price growth is strongest outside Dublin, as these areas display catch-up price rises.
It came as Barnardos warned that child homelessness is increasing at an "unfathomable rate". Rates of child homelessness increased by 55pc from December 2015 to December 2016, despite Government efforts to tackle the housing crisis.
"Children are overwhelmed with how their lives have changed and they are fearful of what their future contains," Barnardos CEO Fergus Finlay said.
Separately, the State's largest landlord saw profits jump by 52pc to €47m last year.
IRES said its profits for 2016 shot up due to strong demand and a "significant shortage of housing".
Higher rents were behind the profits surge. Average rents rose by 4pc to €1,427, the company said. The group acquired a further 763 apartments last year for €172.4m, taking its total to 2,378.