A new survey published has revealed that almost one-in-four builders expect the house prices of new builds to fall next year.

The latest Merrion Irish Housebuilder Survey, which covers the autumn of 2007, also said that around 60 per cent of builders now expect to build fewer houses next year than in 2007. This contrasts with the nine per cent who expected their output to drop, when they were surveyed for the April survey.

"Expectation for 2008 indicate that the slowdown is expected to last for significantly longer than was previously expected," the survey stated.

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"The change in expectations indicates that the slowdown is expected to last for significantly longer than was previously expected."

The slowdown in the building industry will curb supply and could help prevent a house-price crash, the survey predicts. Around 29 per cent of respondents believe prices will decline this year, while 51 per cent see prices remaining unchanged.

A "large number" of builders said during this year’s market, sales rates had "decreased significantly" over the last four to five months. "As a result, the Spring 2008 selling season is seen by many to be critical in bridging the gap between the slow sales seen in 2007 and completions picking up again towards the back-end of 2008," Merrion said.

The survey also found that builders continue to prioritise supply reduction rather than cutting prices, in response to the slower market conditions.

(JM)