Irish house prices may fall for a fourth year in 2010 as the recession persists, a survey of economists said.
Home prices will shrink 9 per cent, according to the median of six estimates in a Bloomberg News survey. Prices have already fallen 27 per cent from their peak in early 2007, based on a monthly index by Irish Life and Permanent.
"The economy is contracting, there's still housing oversupply there," said Dermot O'Leary, chief economist at Goodbody Stockbrokers.
"It's hard to say we've reached a floor."
Ireland's economy shrank about 7.5 per cent last year, almost twice the euro-region average. Gross domestic product may shrink 0.8 per cent in 2010, marking a third annual contraction, the survey showed.
The survey indicated that unemployment could rise further, from 11.8 per cent in 2009 to 13 per cent this year.
"It's going to be a tough one," Mark Bourke, chief executive officer of Dublin-based IFG Group Plc, said in Dublin yesterday. "There's very little to indicate there will be a major recovery."
In addition to the economic slump, Minister for Finance Brian Lenihan is facing a widening budget deficit and is cutting the wages of government workers and welfare payments.
The actions won't be enough to reduce the gap this year, according to the survey. Economists see the deficit averaging 11.6 per cent of GDP in 2010, little changed from 2009's 11.7 per cent.
There may be some pick-up in economic growth the second half of this year, in tandem with a continuing recovery in overseas demand, economists said, echoing forecasts from the Government. The global economy is gathering strength after central banks around the world trimmed borrowing costs close to zero and injected billions of dollars in stimulus measures.
Confidence in the world economy held near a record high in December and the MSCI World Index has surged 71 per cent since reaching a 2009 low on March 9th. The benchmark Iseq index has gained 60 per cent in the same period.
"Export growth is likely to return in a significant way in 2010," said Rossa White, chief economist at Dublin-based stockbroker Davy. "Second, consumer spending will bottom early in the year and expand slightly as the year progresses."
In a note on economic predictions for 2010, the stockbroker today forecast GNP growth of 0.3 per cent for 2010, and said the economy would pull out of recession in the first half.
Consumer spending is also expected to rise as unemployment peaks and the fiscal position improves, the broker said, while disposable incomes should start to grow in the second half of the year, boosting consumption.
Bloomberg