HOUSE prices could fall another 25pc, but despite this it is a good time for some people to buy, an analysis of the residential-property market from NCB Stockbrokers has found.
Even if prices do fall further it is rational for consumers to buy now, economist Brian Devine wrote yesterday.
"At current levels of rents and house prices it is rational for certain households to purchase rather than rent. This is based on certain assumptions and does not imply house prices will not fall further," he said in a research note.
Prices could fall further because there is a huge excess supply across the country.
Mr Devine has calculated that there is 68 months worth of excess supply.
This means that it would take just over five-and-a-half years for population growth to catch up with property availability.
The NCB economist said that there were vast differences across regions with Dublin and the mid-east having far less supply.
"Rents have been stable to rising at a national level for 16 months now. This, though, disguises the fact that rents in the cities have been rising while rents outside of the cities have been declining," the report notes.
He said that based on average household income and rental yields, house prices were now somewhere between fairly valued and being 25pc overvalued.
The factors determining house prices were consumer confidence, employment, positive expectations, government decisions and the banks' decisions on lending criteria.
Figures from the CSO last month showed that prices were stable for the month of March -- only the third time this has happened since 2007.
Those official CSO figures mean that the average price of a residential property nationally remained stable for the past month, at around €160,000.
It is a contrast to almost every other month since the market peaked, when prices plunged.
Experts said the latest figures may indicate that property prices were close to stabilising after five years of sharp falls.
Prices have fallen by 49pc on average during the crash. In the past 12 months prices have fallen by 16.3pc, but the pace of the fall has slowed. Dublin prices rose by 0.7pc in March -- the largest rise since August 2007.
And there was an even larger 2.3pc rise in apartment prices in the capital.
New CSO figures for April are due out in the next few days.
Last month, the Daft.ie price index picked up price rises in urban areas. Properties were selling faster and there was a shortage of homes for sale in some parts of the country.
The report compared the cost of renting and buying. A house bought in the first quarter of the year at the average asking price of €177,000 using an 85pc mortgage of €150,450 over 25 years would cost about €770 a month at present compared to an average rental cost of €813, according to figures from the Daft.ie website.
Rents have been stable to rising over the last 16 months but they could fall if the Government reduces the so-called rent supplement for people living in private rented accommodation, the report adds.