Irish housing market commentators have suggested the sector is going through a drastic correction, which could result in 40% being wiped off peak prices.

A survey, which questioned economists, said the price decline would continue through the rest of this year.

However, the experts have projected a slight market turnaround, near the start of 2009.

Irish property values peaked during the first quarter of 2007, but successive price falls have occurred over the last 16 months.

Irish economists have said this slump could continue for another 18 months.

Goodbody Stockbrokers's Dermot O'Leary has said price corrections still be effecting the market well into 2010.

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Yesterday, Permanent TSB/ESRI revealed Irish house price had dropped almost 10% during the 12 months leading up to June.

This shift has reduced the average value of a home in Ireland by €40,000 since January 2007.

However, leading economists have questioned the merit of the Permanent TSB/ESRI index.

They have suggested the figures are based on mortgage approvals and that the prices surveyed could be around three months out of date.

For these reasons, the economists said they felt the index underestimated house declines.

Bank of Scotland Economist Noel Griffin, said: "Prices will continue to fall, as the current environment is one of a loss of confidence, increasing unemployment, higher inflation and lower disposable income."

Alan McQuaid of Bloxham Stockbrokers has been less optimistic and predict further price falls this year.

Mr McQuaid said: "Overall, house prices will be back on a rising trend in the latter part of 2009 and in 2010, though the extent of the gains will be in low, single digits."

(PR/JM)