Housing fears prompt market falls

IRISH share values lost further ground yesterday as fears about the housing market saw another €500m wiped off the value of the ISEQ 100 Index which was down by a further 0.64% in late afternoon trading.

Losses this year are now close to €21 billion as investors continue to sell banking and construction stocks.

Elsewhere, the US and the rest of Europe were showing modest gains having suffered heavy losses in recent days.

Despite those modest gains analysts warned the continuing impact of the subprime sector will see markets remain volatile into the New Year.

On the domestic front Grafton Group was hit hard yesterday and its shares lost 35 cents to €7.19, a fall of 4.79%.

Grafton Group is the country’s biggest builders’ merchant and suffered its biggest fall for a month as fears about the Irish and British housing markets intensified.

Investors in Irish shares took fright again as Irish housing registrations, a proxy for housing starts, fell by two thirds in October from a year earlier.

Davy Stockbrokers said the number of houses to be built next year was likely to be well down on this year’s figure of 75,000.

It expected the pace of decline in house completions will accelerate sharply in the final quarter of this year and in the first half of next year.

On the basis of existing statistics house completions next year should fall sharply to 55,000, it said in a recent note.

As a result of the poor housing figures investors fear for the earnings of the bank and building sectors in Ireland and they have been heavy sellers of Irish stocks this year, resulting in the huge loss in values since January.

On the market yesterday some of the key losers apart from Grafton included AIB which fell 2.26% to €15.54.

Bank of Ireland fell over 1% to €11.32 while Anglo Irish Bank bucked the trend and gained 1.46% on the day.

CRH which has also lost heavily in the past few months was down a further 0.6% yesterday while Greencore, the convenience food group with extensive property interests in Carlow and Mallow lost over 3% on the day.