AS many as 26,000 Irish houses will be repossessed after falling into deep mortgage arrears, with the pace of seizures predicted to step up rapidly from next year.
But 52,000 homes could see a share of their debt written off.
That's according to figures rating agency Fitch says are based on information supplied by the Irish banks. It warned that Ireland faces a decade of high debt and low growth after emerging from the bailout.
Despite signs of recovery, they warned that house prices may yet have further to fall next year before reaching an expected level of 60pc below the 2007 peak of the property bubble.
Fitch analysts made the comments in an update to investors on how it sees Ireland as we emerge from the EU/IMF bailout.
The country has made impressive strides to leave the programme, including taking the biggest wage cuts of any population in the eurozone, but now faces a decade of high debt and slow growth, the agency warned.
Fitch's London-based mortgage analyst Sanja Paic said recent price rises in Dublin were "unsustainable" in the long term because they are driven by a lack of supply that will prove temporary.
The number of homes for sale in Dublin is around 24pc below the level seen even in 2012, she said. The number of homes being built is still a fraction of the peak, she added.
One factor anticipated to put downward pressure on prices will be a sharp rise in the number of homes being repossessed, she said in a conference call with investors, analysts and the media yesterday.
Fitch said one in five houses where mortgages had been in arrears for three months or more was likely to be repossessed.
Despite saying repossession would be a last resort for lenders, it means as many as 26,000 properties, including buy-to-let properties and actual family homes, could be seized by the banks.
It's a far higher level than is being predicted by rivals like Moody's but the Fitch numbers are based on what Irish lenders are telling the agency, a spokesman said.
However, even with such bleak prospects, most homes with loans in arrears will not be repossessed.
Around 52,000 mortgage accounts could ultimately see some level of debt write-off, Fitch said. Around the same number will hold on to their house by repaying arrears, according to the agency.
There is evidence that a significant number of buy-to-let investors in particular are not making repayments but have the ability to, Ms Paic said.
As those people are brought back to the table by the banks, which have beefed up powers to chase defaulters, their arrears will be repaid, she said.
"A significant number of those in late-stage arrears will actually cure their loans," Ms Paic said.
On overall levels of mortgage arrears, Fitch said 2014 would be a crucial year for the banks.