Speaking to the Sunday Independent, Mr Drumm said however, when prices do begin to rise again in two years time the price growth is unlikely to beat the rate of inflation.
And, in order for builders to sell their properties this year, they must be prepared to slash their sale prices by 15 to 20%.
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Mr Drumm said: "Anywhere there has been substantial price reductions of 20% or so, demand has come back.
"The slowdown will lead to new estates being launched at appropriate prices," he said.
"Pricing (has) got away from affordable levels. The suppliers of housing kept putting prices up and eventually they broke the market.
"What we have in Ireland is inherent demand for housing - but we over-egged it."
About 70,000 houses were built in Ireland last year, and is expected to fall to 50,000 in 2008. However, Drumm said if that number fell to 30,000, the property market would recover more easily.
(VB/JM)
