In the same month, the Central Bank called in the financial institutions as one Dame Street official somewhat worryingly said that house prices were entering "uncharted waters".

Those were the days when a three-bed house in Dalkey, in south county Dublin, was selling for 270,000. A 20-year mortgage was the norm.

New borrowers could get house loans of between 90% to 95% of property values while the banks were just about willing to lend more than 2.5 times a customer's salary. Ireland was, however, on the cusp of the economic boom and the housing market was about to take off. So while the regulatory authorities fretted, the Irish public embarked on a property-buying spree financed by huge volumes of mortgage debt.

Still the warnings continued to come. In May 2003, The Economist magazine claimed Irish property prices would fall by 20% by 2007. A little over a year later, the International Monetary Fund said the "possibility of an abrupt unwinding of the housing boom", which would be a risk to the Irish economy.

The Irish love affair with property continued, apparently oblivious to what the experts were saying. Then, finallylast autumn, it seemed that the property market was cooling. The rate of increase in house prices fell back to single digit growth levels. But the market was merely taking a breather. Prices are again increasing by over 10%. Mortgage growth in the first part of 2006 has hit 30%. Borrowers took out 5.6bn in loans in March. As a nation, the Irish owe over 100bn in loans on property.

As the market has boomed forward, warnings . . . silent for a couple of months . . . have come back into vogue. "The pick-up in house prices is a worrying development and increases the risk of a sharp correction, " Tom O'Connell, the assistant director general of the Central Bank, said last month. But, as previously, it would seem nobody is listening.

Interestingly, the list of the non-believers in a house price slowdown, not to mind a property crash, includes the Taoiseach. "Construction is hugely strong at present and looks as if it will be for the medium term. I'm always sceptical of the glass half-empty, " Bertie Ahern said last month as he appeared to advise would-be purchasers to get into the housing market. "I think you have to look at the asset. This is the question . . . if you are borrowing 'x', if you sell the asset, if there's a bit of a downturn, will you get 'x' back in return? That's the issue."

Ahern also had a not-too-subtle dig at the Central Bankers and economists who had been predicting a property downturn. "Really we should have an examination into why so many people got it so wrong. My view is there's not a great problem. Really, the bad advice of last year given by so many has maybe made some people make mistakes, that they should have bought last year."

Despite the prophets of doom and gloom . . . and they've now had a decade of pessimistic utterances . . . there seems to be no indication that people are in serious trouble. There is no evidence of increased repossessions or of firsttime buyers dropping out of the market. This may be in part because the mortgage market has adapted. From a situation of the 90% mortgage at 2.5 times salary repaid over 20 years, the market now offers 100% mortgages on multiple of three to four times salary with much longer loan repayment durations.

The latest figures from the Irish Mortgage Corporation indicate that a majority of first-time buyers are opting for house loans with a 30-to35 year repayment term. For the first three months of 2006, 27% of IMC's mortgages went for a 30-year term while 52% went for a 35-year term. The IFG Group reported last week that whereas last year 3.4% of first-time buyers took out a 40-year mortgage, that figure in the first part of 2006 had increased to 12.5%.

The easier availability of credit comes at a huge financial cost, and here may be the real scandal of the Irish property boom. Longer repayment terms allow borrowers to qualify for more money but the costs are enormous. Figures released last week show that a 250,000 mortgage repaid over 20 years at a 3.6% rate would cost the borrower an additional 101,067 in interest payments. However, the same mortgage amount repaid over 30 years would cost 159,179. A 40year term on a 250,000 mortgage would cost 222,094.

The attraction to the buyer is obvious from the monthly repayments required to service the mortgage debt. For the 20-year mortgage, the monthly repayments would be 1,462; for the 30year term, repayments would be 1,136 a month, while for the 40-year period, the repayments each month would cost 983. Whatever the attraction of lower montly repayments, longer mortgage agreements are hugely expensive in the longterm and they bring a generation of debt for most first-time house purchasers. A 25-year old taking out a 40- year mortgage would just be making their final mortgage payment as their retirement looms.

There's no doubt that a downturn in the construction sector would hit employment and government revenues. A rapid increase in interest rates would bring "an unpleasant shock" for some 50,000 homeowners, according to the ESRI. The European Central Bank is expected to increase rates once more next month. It is against that background that from the start of this month, the regulatory authorities started to keep a much closer eye on the lending institutions. A new round of stress-testing of financial institutions is underway to determine their vulnerability to economic shocks while mortgage lenders now have to put aside more capital to cover loans valued at more than 80% of a property's value. For several years, economists and policy makers have warned that property prices cannot keep increasing at two to three times annual income rises. But with the financial institutions changing the rules of the lending game, the property boom may have some way to go yet.

'Every penny inmy account is working to reduce my mortgage' SEAN O'Donovan and Antoinette Dowling used a 100% mortgage to buy their first home, a four-bed bungalow in north Co Dublin, which cost them 317,500.

The couple, who work for the same American multinational, swung into action as soon as First Active introduced the country's first no-deposit home loan last July.

Within days, they had obtained approval in principle and last October, they finally got the keys to their new home.

They opted for a current account mortgage. It offsets any money they have in the bank when calculating interest, which is charged at 3.29%. The mortgage is for 30 years. "We were typical candidates for a 100% mortgage in that we've reasonable incomes but didn't have 35,000- 40,000 in our back pockets for a deposit, " said Sean. "We always planned to buy as soon as we could."

Having borrowed all of the money, any drop in house prices would push Sean and Antoinette into negative equity, owing more than their house is worth. This is why they bought a house big enough to meet all their needs and, with 1,600 sq ft of space, trading up is definitely not on the horizon. The location is also convenient, allowing a manageable 30-minute commute to work.

"I don't see us moving anytime soon, " said Sean.

Antoinette believes it is important to hold out for what you really want. "It's good to do things right first time rather than just buying anything to get on the property ladder. We could probably have got a deposit together before now, but we would have had to settle for a smaller house that's miles away from where we want to live."

Antoinette used to bank with Permanent TSB. Even though it also offers 100% mortgages, she switched to First Active because of the current account mortgage.

"Every penny in my bank account is working to reduce the outstanding balance on the mortgage and the term, which can only be a good thing, " she said.