More than half of Irish mortgage brokers expect business to decline further in the first quarter of 2009 as falling house prices and rising unemployment deter buyers, according to a new survey .
Some 80 percent of brokers said business fell in the three months through November, Dublin-based KBC Ireland (formerly IIB) said in its Mortgage Market Sentiment survey, which was issued today. The brokers attributed the drop to factors including concerns about the economy and tighter lending standards.
Irish mortgage growth is at its lowest in 22 years as the country deals with a housing slump that's dragged the economy into a recession. While interest-rate cuts by the European Central Bank may improve affordability, the slump has been compounded as the global financial crisis prompts banks to tighten lending.
"There are good reasons why the market is under pressure at the moment," KBC Ireland chief economist Austin Hughes said in today's report. "Clearly the fear of job loss is deterring people from making major long-term spending commitments such as a house purchase."
About a quarter of the 250 brokers surveyed by KBC in the second half of November said tighter credit conditions were the main reason for the decline in house purchases, while a similar number cited concerns about job losses.
Seventy-five per cent said lower interest rates will have a positive impact on the property market.
Separately, Goodbody Stockbrokers in Dublin said Irish gross domestic product will shrink 4.2 per cent next year, revising its previous forecast for a 4 per cent contraction. Goodbody chief economist
Dermot O'Leary said rising unemployment signals "worse prospects" for consumer spending, which he sees falling by 3.5 per cent in 2009.
Bloomberg