AKC News // NCB dismisses chances of housing crash

The housing market is not in danger of crashing, according to a new report published by NCB Stockbrokers.

The report says that the housing market was not the driving force behind the economic boom that began in the early 1990s, and, therefore, the readjustment in the market will not have the detrimental effect on the economy that some analysts have predicted.

NCB says that solid economic growth, falling property prices and the likelihood of two interest rate cuts later this year by the European Central Bank will increase affordability in the housing market.

The firm thinks the economy will grow by 3.5% this year and by 4.5% in 2009.

Eunan King, chief economist at NCB, says that the conditions that are needed to bring about a housing market crash do not appear to exist at the moment.

'Interest rates have peaked at a relatively low level, fiscal policy is mildly expansionary and employment and earnings are still rising. At the same time the underlying demand for accommodation, driven by demographics, remains strong,' he said.

King believes that the dip in demand for property will lead to increased consumer spending in other areas.

Source: RTE: http://www.rte.ie/business/2008/0311/housing.html?rss

Date : 11-03-2008