End of year figures will show that they spend around €15 billion in 2008, down from €45 billion in 2007 and down 73% from the peak of €54.4 billion in 2006, according to Savills Ireland.
Savills say it is vital that the government and the banks take immediate action to solve the lack of liquidity that is crippling both the residential and commercial property markets.
Deterioration in market conditions this year has outweighed all expectations with the pace and impact unforeseen by most experts, the Property Outlook report from Savills says.
There are signs that something will be done to recapitalise the Irish banking sector but every day that goes by puts more companies out business, pushes up unemployment, reduces tax revenue and brings us deeper into recession, it adds.
The evidence of the huge decline in spending is clear across all sectors of the property market and is most obvious in the new homes area. The total spend on new homes is expected to fall from an estimated €23 billion in 2007 to just €6 billion this year.
Spend in the Irish investment market is expected to be down as much as 75% from last year's €2 billion. Spend on domestic land is expected to fall by a staggering 80%. These numbers reflect both the fall in volumes of deals being done and also obviously a significant drop in the value of individual deals being done, the report points out.
In the new homes as in the second hand market, prices have fallen by as much as 30% this year and maybe more if looked at on an individual basis. The development of new homes has come to a virtual stand-still.
'We estimate that at most 25,000 new homes will be built next year. We expect that supply and demand factors have pushed prices close to the bottom and that by mid 2009, prices will have stabilised. What is needed then is a period of at least six months to a year of price stability to allow buyer confidence to be restored which will in turn increase activity levels,' said Joan Henry, head of research at Savills Ireland.
In the office market tenant demand has fallen significantly and rents, particularly for second hand or poorly located space, have dropped. Take-up in 2008 is expected to be close to 180,000 square metres, which although significantly below the 2007 level, is still a good rate. In suburban markets there is a rise in the level of over supply and rents remain very competitive.
The main positive note from the report is that the market is expected to have bottomed out by 2009. 'Given the extent of the adjustment in the property market and the pain being taken this year, coupled with decisive action by central banks to free up the liquidity situation, we expect the market to bottom out by 2009 and for activity levels to pick up throughout next year, albeit at considerably lower values and volumes,' concludes Henry.