Belfast Telegraph

House prices in the Republic predicted to fall even further

By Thomas Molloy

Ncb Stockbrokers said the price of buying a home in the Republic will fall by at least a fifth in the years ahead as Ireland recovers "from the largest credit and housing bubble in OECD history".

The Dublin-based broker said the eventual national decline from peak to trough will be 60%.

Average prices have fallen 47% so far, which implies that prices must fall by at least another 20% before hitting rock bottom.

"The boost from domestic demand will not be material until 2013," NCB economist Brian Devine said.

"Unemployment, currently 14.3%, will remain above 10% until 2016.

"As such, there should be no surprise that property prices continue to decline, mortgage arrears continue to rise and retail sales remain weak."

Mr Devine said he remains worried about the fundamentals underpinning the Irish economy but kept forecasts for GDP growth this year unchanged at 0.3%.

Despite this challenge, the stockbroker said the country has showed the characteristics required to put the economy back on the right track.

Earlier, an Irish government adviser said austerity was not working for the Republic.

The experience of Ireland and Greece "tells me that austerity doesn't work", said Michael O'Sullivan, who is head of research at the Credit Suisse private banking unit and author of Ireland and the Global Question.

Mr O'Sullivan, who has also taught at Oxford and Harvard, was one of eight people appointed as an independent member of the National Economic and Social Council by Taoiseach Enda Kenny last November.

"Ireland has had a classic and very big and bad asset price bubble," he said. "That is the cause of our malaise."

Earlier, he said that "Ireland has the additional straitjacket of the eurozone austerity mantra, which for Ireland may have the short-term effect of creating lots of unemployment".