Credit rating agency Moody’s warns that residential property prices in Ireland could plummet by a further 20% from today’s levels before the market finally bottoms out.
If accurate, this would bring the aggregate peak-to-trough fall to 60%, potentially leaving Ireland’s rate of mortgage arrears as high as 13.99%.
“The steep decline in house prices since 2007 has placed the majority of borrowers deep into negative equity,” the agency explained.
The Irish property market’s prospect for recovery has not been helped by Moody’s decision to lower its growth estimate for the Irish economy in 2012 to just +0.2%.
“In this weak economic recovery, it will be difficult for distressed borrowers to significantly increase their debt servicing capabilities and so arrears are likely to continue increasing,” it said.
The collapse in Irish property values is attracting a growing number of potential purchasers, with residential property viewing figures up 400% in Q1 2012 compared to the final quarter of 2011, according to Savills.
The property consultant says that its latest viewing data suggests that homebuyers are returning to the Irish property market, particularly in the greater Dublin area, where the number of homes for sale is at its lowest level for five years
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