House prices could fall as much as 30 per cent from their peak due to an oversupply of stock, Goodbody Stockbrokers said today.
The firm warned that prices in the market, which have already decline 12 per cent from peak levels, could fall further in the coming two years.
In a note, Goodbody analyst Dermot O'Leary said the "obsession" with the domestic and international housing market had not waned.
"Given that the root of the problem in financial markets over the past 12 months lies in the ailing US housing market, investors still seem concerned that further asset price declines will prolong the malaise, as credit write-downs continue," he said.
He said that Ireland does not have the problem of forced sales, such as foreclosed properties, as yet but said the firm's analysis of the stock of homes available for sale suggested a "significant overhang" of properties in the market. Goodbody has calculated that, at current stock levels, it amounts to some 18 months of supply given the level of transactions seen in the market.
"Clearly, to reduce this stock, further price declines are needed," said Mr O'Leary.