House prices to fall by another fifth as Ireland recovers
NCB Stockbrokers said the price of buying a home 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 calculated that the eventual national decline from peak to trough will be 60pc.
Average prices have fallen 47pc so far which implies that prices must fall by at least another 20pc before hitting rock bottom.
"The boost from domestic demand will not be material until 2013. Unemployment, currently 14.3pc, will remain above 10pc until 2016," NCB economist Brian Devine warned.
"As such, there should be no surprise that property prices continue to decline, mortgage arrears continue to rise and retail sales remain weak," he said.
Prices in Dublin have already fallen close to this amount with apartment prices in Dublin down 58pc and house prices in Dublin down 54pc.
Mr Devine said he remains worried about the fundamentals underpinning the Irish economy but kept forecasts for GDP growth this year unchanged at 0.3pc or one whole percentage point below the Government's forecast.
Despite this challenge, the stockbroker said the country has showed the characteristics required to put the economy back on the right track.
Earlier, a government adviser said austerity was not working for Ireland. 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 in Oxford and Harvard, was one of eight people appointed as independent members 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".