House prices may be ‘corrected’

CHAIRMAN of house building group Abbey plc Charles Gallagher warned yesterday that a 15% to 20% house price correction in the Irish market cannot be ruled out.

Ruling out a house price collapse because of the low interest rate environment and reasonable economic prospect, Mr Gallagher said that, once demand starts to wane in this country, a "significant correction rather than a house price collapse cannot be ruled out".

However, he doubted if the environment was there to create the kind of negative equity witnessed during the Thatcher era in Britain. Back then interest rates doubled in a short period from 7% to 15% at a time when people were seriously over-borrowed.