Property prices overvalued by 10% risking another market crash, ESRI warns

The ESRI noted that 33,000 homes are expected to be delivered this year which is far short of what the market requires

The growth in property prices has continued to increase and, as of August, house prices were 13.4% higher than they were pre-financial crisis in April 2007. Stock picture: PA

Property prices in Ireland are overvalued by as much as 10% which adds to the risk of a "painful correction” in the housing market similar to the 2007 property crash, a new assessment by the Economic and Social Research Institute (ESRI) has found.

As part of its latest quarterly economic commentary, the ESRI conducted an assessment of the sustainability of current Irish house price levels and found overvaluations are creating dangers for the future of the market.