House price inflation continues to re-accelerate, according to AIB. Research released yesterday by the bank shows national annual house price inflation running at 8.2 per cent in November.

This compares with 7.2 per cent in October and an average rate of 6.2 per cent in preceding months.

Price growth continues to be stronger in Dublin, with annual inflation running at 9.6 per cent in November. Outside Dublin, house prices rose by 7.4 per cent.

The research also shows that permissions for the number of dwellings rose by 8.7 per cent in the 12 months to September, indicating continuing strong demand for housing.

However, permissions granted for housing rose by 15.9 per cent, compared to a fall of 7.1 per cent in permissions for apartments.

The report also finds that the number of houses actually completed exceeded all records, with housing completions set to top 77,000.

Borrowing continues to grow strongly, as a result of strong housing market activity, slightly stronger than in the summer. Net mortgage lending grew annually by 26.4 per cent in November, compared to 26 per cent in October and just over 25 per cent in preceding months.

The Republic's commercial property investment market will continue to be dominated by private investors this year, according to a separate new analysis from CB Richard Ellis (CBRE).

The property agent says, however, that yields are likely to fall again over coming months, particularly in the office sector.

"When you consider the imbalance between supply and demand for prime office investment product, it appears likely that prime office yields will be less than 4.25 per cent by year-end 2006," CBRE notes in its latest Outlook.

Despite this, the property agent believes investors seeking both rental and capital appreciation will focus on the office sector.

Prime city-centre and docklands properties are forecast to hold most appeal, but CBRE also argues that office buildings in Dublin's southern suburbs will also attract good interest.

The retail sector is also expected to feature strongly for investors, both through high-street properties and warehouse investments.

Last year, investors spent more than €2 billion on Irish commercial property, but CBRE expects liquidity problems to prevent this being surpassed in 2006.

The agent judges that Irish investors are becoming "increasingly comfortable" with forward-funding models, whereby they will take on more risk to secure the property they want.

"This will challenge lending institutions to develop imaginative products to cater for this growing trend," according to the agent. In CBRE's view, "it is difficult to understand why lending institutions do not consider future growth prospects of particular properties when agreeing loan-to-value ratios".

Un-geared returns of more than 15 per cent are "realistically achievable", in CBRE's view.