However, there are also less likely candidates. Danske Bank warned this week it expects Swedish house prices to fall by 25pc from their peak. Prices in Denmark fell by 6.5pc in the final quarter of 2022.

Perhaps ironically, it is countries such as Ireland and Spain that learned from the last cycle in the 2000s and which now have more conservative mortgage lending standards that are seen as less vulnerable to a housing market correction.

However, the common theme is that frothy valuations built-up during the Covid-19 pandemic in many counties, sometimes explained by a race for space and encouraged by rock bottom official interest rates are popping. The rapid tightening of monetary policy by central banks to choke off inflation over the past year has been the catalyst for the correction in many countries.

For example, the increase in the Federal Reserve’s target rate to 4.5-4.75pc pushed the 30-year fixed mortgage rates in the US to 7.1pc in late 2022. According to the IMF, a simple rule-of-thumb is that every 1 percentage point increase in interest rates has tended to push down house price growth by 2 percentage points on average – potentially into negative territory.

Situation across the water

Kwasi Kwarteng and Liz Truss have probably received more than their fair share of blame for the correction in UK house prices. True, the disastrous mini-budget may have been the tipping point leading to a temporary shutdown in the mortgage market and pushing rates above 6pc.

However, the Bank of England’s decision to hike to 4.25pc was always going to have a negative impact on stretched valuations. According to the Nationwide index, UK house prices are already down 4.6pc from their August peak. Most commentators expect at least a further 5pc decline in UK house prices through 2023.

That said, this week’s Halifax index of UK house prices muddied the waters, up 0.8pc in March after a 1pc gain in February. This will fuel hope a rebound in sentiment is under way, with mortgage rates now falling back amid signs the Bank of England is now close to the peak of its tightening cycle.

However, just as important as the outlook for house prices is the difficult adjustment facing existing mortgage holders. Some two million British households will be forced to refinance their fixed rate mortgage products by end-2023, many from their existing rates of 1-2pc.

In December, the Bank of England estimated that because of higher interest rates 670,000 households may end-up spending 70pc of their incomes (after essential items such as food and energy) servicing their monthly mortgage payments. Clearly, it is this group that will be most at risk of going into arrears or pushed into forced sales.

Can Ireland stand out from the crowd?

At face value, this week’s MyHome.ie report suggested a similar correction is now underway in Ireland’s housing market. Asking prices fell for a third consecutive quarter, down 0.3pc early in the year to a median of €310,000.

However, it is worth noting this was concentrated in Dublin. Prices in the capital fell 0.8pc to €395,000 at the median. In the rest of Ireland, asking prices rose marginally by 0.2pc. This corroborates the message from the CSO’s official measure of transaction prices, showing prices in Dublin have already declined by 2pc since September.

Stretched valuations were evident in the 5pc median premium buyers were prepared to pay over asking in 2022. However, this had declined to just 1.7pc in March. That is, those properties listed for sale in August/September when the market peaked, saw a smaller premium as transactions were finalised in recent weeks – demonstrating affordability had deteriorated.

This behaviour was especially apparent in the most expensive price brackets. There were 1,662 residential transactions in 2022 sold above €1m. These were settled on average by 11pc above the asking price. However, we will likely see a far higher proportion of transactions settled at, or below, asking prices in the coming months.

That said, the Irish housing market is still very tight and may well find renewed impetus in 2023. There are currently only 13,337 properties listed for sale on MyHome,ie, still well down on levels exceeding 20,000 prior to Covid-19. Given the resilient performance of the Irish economy and employment there has been little let-up in demand.

Crucially however, Ireland’s mortgage market is behaving very differently to the UK. In February, the average UK mortgage approval was £213,500, down 8pc on the year, or by £19,000. This shows the tightening of credit conditions pushing down on UK house prices.

However, a surprise in late 2022 was the Central Bank of Ireland’s decision to ease its mortgage lending rules. Specifically, the decision to raise the regulatory threshold on loan-to-income (LTI) ratios from 3.5 times to 4 times for first-time-buyers.

The Central Bank estimated this rule change could gradually push up Irish house prices by 8pc over a three-year period.

In February, the average mortgage approved in Ireland hit a fresh record high of €291,500, up 7pc on the year. This could be the first sign the rule changes are having an impact with first-time-buyers now taking on more debt despite higher interest rates.

However, the European Central Bank may still have more work to do to bring inflation back to its 2pc target.

At the time of writing, options prices still imply the ECB will raise its deposit and refinancing rates at least once more by 25 basis points to 3.25pc and 3.75pc respectively.

This could certainly squeeze affordability in Ireland further, depending on when and if the Irish banks push up their fixed-rate mortgage products, currently around 4pc on average.

Our current Davy forecast is that Irish house price inflation will be 1.5pc through 2023. However, we shouldn’t pretend to be overly precise and the outlook is uncertain. It looks set to be a soft year for Irish house prices, which may move up or down marginally.

However, a substantial correction in Ireland similar to some other countries seems unlikely. Housing demand still exceeds supply and due to the surprise Central Bank decision to loosen the mortgage lending rules, there’s going to be a gradual impetus to Irish house price inflation.

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