Report Predicts Irish Housing Market Slowdown

A report from ratings agency Standard & Poors has warned that a sharper slowdown in the construction sector may cause economic growth to slow rapidly next year to perhaps as low as 1%.

The report says the slowdown will hit economic growth to varying degrees, with Ireland and Spain suffering the most due to their dependence on the construction sector. The credit rating agency says house prices in the two countries and the UK are about 30 per cent overvalued and on the verge of a "protracted correction", and despite the already evident slowdown in housing starts the main effects will only be felt from 2008, as first-half 2007 economic growth was relatively robust in the three countries.

'In Ireland and Spain economic growth could take until closer to 2015 to gain the growth rates expected in 2008 due to the relative size of the construction sector', it says.