A new report from Goodbody Stockbrokers says house prices will fall by 8% next year after a 5% decline this year.
Its economist Dermot O'Leary has also produced the lowest forecast yet for economic growth for 2008. He says gross domestic product will expand by just 2.5% next year after a 4.9% rate this year.
Mr O'Leary says builders are responding more quickly than expected to the housing slowdown. As a result, he now expects just 50,000 homes to be completed next year, 10,000 lower than his previous forecast.
But the economist believes that growth can rebound to 3% in 2009 as the housing market stabilises and Government spending on the National Development plan helps the rest of the construction sector.
Mr O'Leary's report also predicts that consumer spending growth will fall back to 3%% next year from 6.5% this year, mainly due to slower employment growth.
