First the good news – the Irish housing market has finally hit rock bottom in the wake of the economic collapse according to a leading international credit ratings agency.
Now the bad news – it may be some time before the market drags itself off the floor according to the same Standard & Poor’s report.
The S&P report, widely quoted in all the Irish papers on Thursday, says that the market is coming to the end of a ‘correction’ in prices but with interest rates set to rise, prices are unlikely to show much growth.
“Ireland’s prices have corrected but there’s no recovery in sight,” said the American-based agency.
The report states that Irish prices have fallen 33 per cent from their peak in the late 00s but many experts believe the falls have been much steeper according to the Irish Independent.
“Irish house prices have, in our opinion, completed their correction but it will take time - probably another couple of years - before we see tangible signs of market activity resuming,” said the pan European report which confirmed that Irish falls were the biggest on the continent.
Prices, according to Standard & Poors, are now back at 2000 levels and more affordable to ordinary buyers.
“This suggests that, unlike other markets, Ireland has pretty much fully corrected the excess of the previous housing bubble,” said the company.
“Still, this does not mean that the market is about to pick up again soon, in our view. We continue to see uncertainties about the extent of supply overhang that still needs to be absorbed.”
Some experts, S&P noted, believe there are 300,000 excess houses and apartments in the Irish market.
“More recent estimates from the Irish Department of the Environment point to a much lower number of 23,000, but based on a smaller survey of recently completed estates,” the agency claimed.
“Ireland’s overall economic situation, with growth expected to remain very weak this year on the back of a severe fiscal adjustment, combined with the likely gradual rise in Euro-zone interest rates, does not call for much optimism regarding the short-term housing market.”