New figures from the Central Bank show that the growth in residential mortgage lending fell to 7.6 per cent in October, the lowest figure since 1986.
According to the latest data, the amount of money lent for residential mortgages last month rose by just €26 million. This compares with an average monthly increase of over €700 million in the previous three months.
The Central Bank said that mortgage lending last month was "exceptionally weak." It attributed the decline in part to banks' tightening of credit to buyers.
Overall private sector credit increase by €2.1 billion in October and exceeded €400 billion for the first time.
Meanwhile, a new report from the Central Statistics Office (CSO) which was released this morning, indicate that the contribution from the construction sector to the economy in 2008 will decline by 23 per cent this year to €29.7 billion from €38.5 billion last year.
The largest annual percentage increase since 2003 was in 2004 when output increased by over 19 per cent.
The residential sector, which accounted for nearly 60 per cent of construction last year, will decline by 38 per cent in 2008.
The latest figures reveal that employment in the construction sector fell by 10 per cent from nearly 282,000 in the second quarter of 2007 to 255,000 for the same period this year.
During the period 2002 to 2008, employment in the sector rose 40 per cent and it accounted for 13 per cent of total employment last year, compared to an EU average of 8 per cent.
Approximately 17 per cent of those employed in the construction industry at the end of 2007 were defined as non-Irish with nearly three-quarter of these individuals hailing from the Accession States.
According to the CSO figures, over the period 2002 to 2006, the number of house completions rose each year to a peak of 88,200 in 2006. However, the number of houses completed last year decreased by 12 per cent to 78,000.
Figures for the first two quarters of 2008 show a significant slowdown with only 70 per cent of the number of completions when compared to the same period a year ago.
Furthermore, Ireland had the highest number of housing completions in the EU last year at 18 per 1,000 of population.
The average price of a new house in Ireland was €320,800 in 2007; an increase of 65 per cent since 2002. While house prices increased throughout the period 2002 to 2007, the rate of increase began to slow in 2006 for new houses and for secondhand houses the rate of increase dropped significantly in 2007 to only 3 per cent.
The total value of mortgage debt increased from €47.2 billion in 2002 to over €139.8 billion at the end of 2007 while mortgage debt increased by almost €16.6 billion from 2006 to 2007. However, the rate of increase slowed from 24 per cent in 2006 to 13 per cent in 2007.
In 2007, the average size of a new mortgage was €266,000, nearly double the 2002 figure.
