Ireland's housing market has now hit the bottom but it may be several years before prices start recovering, a leading credit ratings agency said yesterday.
Standard & Poor's said the Irish property market was coming to the end of a "correction'' in prices, but with interest rates set to rise, prices were unlikely to show much growth.
"Ireland's prices have corrected but there's no recovery in sight," said the American-based agency.
The agency claimed prices had fallen 33pc from the peak, but many people believe the falls have been much steeper. It added that Ireland's falls were the largest in western Europe since the global recession began.
"Irish house prices have, in our opinion, completed their correction but it will take time -- probably another couple of years -- before we see tangible signs of market activity resuming," said a new report, which looked at the whole European market.
Prices are now back at 2000 levels and are far more affordable for ordinary buyers.
"This suggests that, unlike other markets, Ireland has pretty much fully corrected the excess of the previous housing bubble. Still, this does not mean that the market is about to pick up again soon, in our view," said the company.
"We continue to see uncertainties about the extent of supply overhang that still needs to be absorbed," said the company.
It said there were different estimates around about how much excess supply there was in the Irish market. At the upper range, some analysts believe there are 300,000 excess houses and apartments in the Irish market.
"More recent estimates from the Irish Department of the Environment point to a much lower number of 23,000, but based on a smaller survey of recently completed estates," the agency pointed out.
The general health of the economy was also likely to play a part in prices, said Standard & Poor's.
"Ireland's overall economic situation, with growth expected to remain very weak this year on the back of a severe fiscal adjustment, combined with the likely gradual rise in eurozone interest rates, does not call for much optimism regarding the short-term housing market," said the agency.
Standard & Poor's used house price data from the ESRI and Permanent TSB. Some analysts believe these figures understate the full extent of the recent price declines.