House prices to fall 17.4% in 2011

THE Central Bank is assuming house prices will fall 60% from their 2007 peak in an “adverse” scenario used in their planned stress testing of the debt-laden Irish banks.

The bank expects house prices will decline by 17.4% and 18.8% in 2011 and 2012 respectively, before stabilising, consistent with a 60% fall from their 2007 peak.

GDP would fall by 0.5% on average over the three years 2011-2013.