Tuesday, July 3, 2007

Precedents suggest falls of 40-60%

House prices in Ireland could fall by 40% over the next 8-9 years

Don't shoot the messenger, this report from the ESRI, backed up by sound research, provides a sobering and reasoned theory which could just as easily be applied to any EU country that has 'enjoyed' a massive house price boom over recent years. Looking at house price cycles across the OECD since 1970, we find a strong relationship between the size of the initial rise in price and its subsequent fall. Were this relationship to hold for Ireland, it would predict falls of real house prices of 40 to 60 per cent over a period of 8 to 9 years. The unusually large size of the Irish house building industry suggest that any significant house price fall that does occur could impose a difficult adjustment on the economy...

Posted by converted lurker @ 11:19 AM (348 views)
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One thought on “Precedents suggest falls of 40-60%

  • Aine Debts-challenge says:

    This is now happening in Spain at the moment and entirely due to the vast amount of new properties being built. There are now more properties for sale than buyers in the Costa Blanca area.

    Prices have been dropping for the last year resulting in a buyer’s market with some tremendous bargains to be had for anyone who wants to live in this part of the world.

    For the owners, it is a different story with many properties coming onto the market because of divorces, thus leaving the couple in financial straits due to having to accept much lower prices for their property.

    But it is historical in certain countries!

    How many times have we been told that prices would drop – only to find that they actually increased?

    Most people purchase a property to house their family for years to come. They cannot wait for the property market to crash before they purchase, because it may not. Buying property for investment purposes is a different matter, but what is the alternative and how risky are they?

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