Real Estate News
Irish property prices 'could take two decades to recover'
05 Oct 2012
IRELAND - Property prices in Ireland could take between 11 and 22 years to recover, according to a central bank paper published this week comparing the post-crisis Irish real estate market with the Nordics in the early 1990s and Japan in the four years to 2001.
Irish house prices - now in their fifth year of contraction - have fallen by 47% since the residential market began to lose momentum a year before the crisis struck in 2008.
Recovery will take significantly longer, according to the report.
"Past episodes of systemic distress indicate that Irish real property prices, both residential and commercial, may take a significant number of years to recover fully," said the paper's authors, an economist and a researcher from the financial stability division and the statistics division, respectively.
In previous comparable crises, Finnish house prices took 22 years to recover.
Commercial property prices in Ireland have fallen by 71% since 2007 and continue to decline.
Those in Sweden, which fell 63.2% over five years during the crisis, have yet to recover their 1989 levels.
Slowing the Irish recovery is its dependence on export growth, which the IMF has shown plays a lesser role in recessions synchronised across markets.
Moreover, medium-term forecasts suggest it could take three years for Irish GDP to return to pre-crisis levels - significantly longer than in any of the other markets studied.
"The strong linkages between the real economy in the financial system imply a full recovery in both areas will be required to ensure that any future upturn in the Irish economy will be sustainable," the report said.
Author: Shayla Walmsley