Irish house prices will fall by up to 20 per cent over the next four years as part of a worldwide tumble in the property market, according to a survey in the Economist magazine today.
Ireland is listed as one of six countries in the developed world in which house prices will drop dramatically in the near future. Others are the US, Britain, Spain, the Netherlands and Australia.
The survey is based on data from global house-price indices for 13 countries over 28 years, with information from estate agents, lending institutions and government agencies.
It anticipates Irish house prices will fall by 20 per cent over the next four years, with UK prices falling by 25 per cent, and Dutch prices by as much as 30 per cent. The Economist warns: "The consequences will be far more serious and painful than the current plunge in the stock market".
"It will be a gradual slide in property prices. We are not arguing that you could expect a collapse in one day," the Economist's business affairs editor, Mr John Peet, said.
"Given that far out-of-line house prices are quoted, it is likely they will slide over a period of a few years."
There were clear danger signals "flashing red", he said, in cities such as Dublin, Amsterdam and London.
"The signs are in London already that house prices are falling because first-time buyers and transactions are decreasing," said Mr Peet.
"When certain people drop out, such as first-time buyers, the whole market starts to fall," he said, adding that it was "reasonable" to expect the global house-price slide to begin some time this year.
The clear advice to prospective buyers was to wait before buying, according to the Economist. "The logic would be to wait and continue to rent," said Mr Peet.
But the president of the Irish Auctioneers and Valuers Institute (IAVI), Mr Aidan O'Hogan, warned that in the Irish market "sitting on the fence" was a very high-risk strategy.
He said that if the Economist estimate of 20 per cent were true, "we would be faced with a compounded 4 to 4.5 per cent decline per annum, which would give us the same house values as 2002".
He added: "I don't see it as particularly worrying. We know the market is going to slow down and reach a plateau."
The Economist's arguments were too general and did not take local issues into account, said Ms Marian Finnegan, chief economist with Sherry FitzGerald.