Property Prices in Ireland could fall up to 60%

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by Kay Murchie

A Professor from the University College Dublin has indicated that house prices could fall by up to 60% in Ireland. Professor Morgan Kelly has studied almost 40 property price growths and collapses for over 30 years. He comments that the bigger the growth, the larger the bust.

He also states that if this example held in Ireland, property prices adjusted for inflation may drop by 40-60%. He mentioned that house price collapses are sometimes sluggish, so it is likely that a drop of 6-7% in average selling prices will occur over a period of 8 or 9 years. His findings are published in the ESRI’s quarterly economic commentary.

The Professor noted that reducing stamp duty will not affect this providing there is supply of unsold properties and declining prices, buyers will have a reason to wait for a further drop to take place.

He said causes for concern is the affect of building activity, house building currently makes up for 15% of the economy’s Gross Domestic Product (GDP). He also stated that 85% of builders are Irish and as a consequence, a slowdown on government finances and employment could be significant.

However, the Irish Home Builders’ Association has discarded the Professor’s report arguing that it is incorrect his findings are being questioned.