HOUSE prices will fall by almost a half before the economic downturn ends, a leading economist predicted yesterday.
Prices have already dropped by some 25pc since the height of the housing boom at the end of 2005, said Jim Power, chief economist with Friends First. But he expects a further slide of "up to 20pc".
"People may be interested in buying again but they cannot get access to credit. So, if you are in an environment where buyers cannot get credit but there's a lot of excess supply, to me it is clear [prices] are going to adjust further in a downward direction," said Mr Power. "At the end of it I wouldn't be at all surprised if there is a 40pc adjustment from peak to trough."
Yesterday the giant Swiss bank Credit Suisse came up with a similar forecast, saying Irish house prices could fall 30pc to 40pc.
The gloomy picture was presented in the Friends First quarterly economic outlook yesterday, with Mr Power predicting 2009 would be even more challenging. He also predicted job losses spreading outside of the construction sector.
"The economy is going through a very difficult housing market adjustment which is being exacerbated by a lot of negative external developments, such as exchange rate movements, and the whole global credit situation," he said.
He expects no growth for two years, with a 1pc decline this year followed by expansion of 1pc in 2009.
"We are not going to wake up on the first of January next year and find this is all over."
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Am I missing something here?
The national HPI from the ESRI peaked in Feb 07 at 139.5 and was 123.4 in May which is a drop of 11.5%. How does Mr Power get a figure of 25% drop? And prices did not peak at the end of 2005, it was over a year later!
I wonder if it is possible that this statement is being taken out of context?
Don't get me wrong, everyone knows that house prices a dropping but let's not get carried away.
Why is that when prices are going up, that everyone thinks they are property investors and when it is going down they think they are victims of government ineptitude. Those with a sensible view on investing realise that prices fluctuate. House prices will bottom out and rebound. In the long term, they are a good investment. Warren Buffet and others often have advocated a buy and hold approach and do not recommend trying to time the market to get in or out.
If you want to move house then do so, it will cost you less to trade up now than a year ago. I you are happy where you are for the longer term, stay put and this will all blow over. If you want to worry about something, think about your pension which for anyone over 40 has probably taken a bigger hit in recent times than your houses; or your job which will have a much greater effect on people day to day.
Thankfully, the long term outlook for pensions and jobs is probably not too bad.
Also, I notice that the media have given much less coverage to falling oil prices than to equivalent rises.
We can all accept bad news but can we have some balance... please!
Prices have already dropped by some 25pc since the height of the housing boom at the end of 2005, said Jim Power, chief economist with Friends First. But he expects a further slide of "up to 20pc".
"People may be interested in buying again but they cannot get access to credit. So, if you are in an environment where buyers cannot get credit but there's a lot of excess supply, to me it is clear [prices] are going to adjust further in a downward direction," said Mr Power. "At the end of it I wouldn't be at all surprised if there is a 40pc adjustment from peak to trough."
Yesterday the giant Swiss bank Credit Suisse came up with a similar forecast, saying Irish house prices could fall 30pc to 40pc.
The gloomy picture was presented in the Friends First quarterly economic outlook yesterday, with Mr Power predicting 2009 would be even more challenging. He also predicted job losses spreading outside of the construction sector.
"The economy is going through a very difficult housing market adjustment which is being exacerbated by a lot of negative external developments, such as exchange rate movements, and the whole global credit situation," he said.
He expects no growth for two years, with a 1pc decline this year followed by expansion of 1pc in 2009.
"We are not going to wake up on the first of January next year and find this is all over."
#####################
Am I missing something here?
The national HPI from the ESRI peaked in Feb 07 at 139.5 and was 123.4 in May which is a drop of 11.5%. How does Mr Power get a figure of 25% drop? And prices did not peak at the end of 2005, it was over a year later!
I wonder if it is possible that this statement is being taken out of context?
Don't get me wrong, everyone knows that house prices a dropping but let's not get carried away.
Why is that when prices are going up, that everyone thinks they are property investors and when it is going down they think they are victims of government ineptitude. Those with a sensible view on investing realise that prices fluctuate. House prices will bottom out and rebound. In the long term, they are a good investment. Warren Buffet and others often have advocated a buy and hold approach and do not recommend trying to time the market to get in or out.
If you want to move house then do so, it will cost you less to trade up now than a year ago. I you are happy where you are for the longer term, stay put and this will all blow over. If you want to worry about something, think about your pension which for anyone over 40 has probably taken a bigger hit in recent times than your houses; or your job which will have a much greater effect on people day to day.
Thankfully, the long term outlook for pensions and jobs is probably not too bad.
Also, I notice that the media have given much less coverage to falling oil prices than to equivalent rises.
We can all accept bad news but can we have some balance... please!
