Central Bank fears house price collapse

THE Central Bank fears a collapse in house prices and a severe shock to the economy if Ireland is unable to benefit from a pick-up in the global economy.

The bank said it was very concerned about the housing market and its potential to fuel inflation as workers demand wage increases to help them fund the purchase of homes.

In its autumn bulletin, the bank warned that the current spate of house price inflation, if it continued, could be followed by a sharp fall in prices. However, the bank expects house inflation to moderate.