Irish House Prices To Fall 45% From 2006 Peak: Fitch

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Ireland's house prices are likely to fall further on higher costs of funding from financial institutions and the ongoing economic slump, a report by the Fitch Ratings said Monday.

The house price decline to date amounts to 24% from the peak seen in December 2006, and Fitch forecasts a total house price fall of 45% from the peak.

"Tax rises, high unemployment, wage deflation and property supply overhang continue to undermine the country's property market," Alastair Bigley, Head of Irish RMBS at Fitch said.

"Despite almost three years of house price declines, prices have yet to reach a sustainable level of affordability," Douglas Renwick, Associate Director in Fitch's Sovereigns team said. Moreover, this decline is likely to be exacerbated by an expected increase in the cost of funding by financial institutions, the firm added.

The Irish economy is going through a deep recession, and Fitch expects the GDP to contract 7%-8% this year, reflecting the poor state of public finances of the government, leaving no room for it to implement fiscal measures to support the economy. The firm expects the jobless rate to rise to 12.5% this year and then to 15% in 2011.

(Market News Provided by RTTNews)