Tuesday, August 9, 2011

Ireland property 'not yet at bottom' -- could take 10 years for property market to recover

Irish property prices have yet to hit bottom and as a result the final bill for bailing out the banks is likely to be in the region of €90 billion to €100 billion, economist Morgan Kelly said last night.

In his Hubert Butler Lecture to the Kilkenny Arts Festival, Mr Kelly said: "we are very far from the bottom" of the property market and added it would take a decade for the economy to recover from the fallout.

While prices had fallen by 50 per cent, he said “almost no transactions were taking place at that price” and with unsold properties starting to accumulate, Mr Kelly said “we are very far from the bottom of the market”.

He also estimated Ireland’s national debt would rise to between €240 billion and €250 billion by 2015, far higher than the current Government estimates of €200 billion. He said that there was no way the country could repay this.

The UCD economist said the Irish economy would require a decade to recover from the current crisis.

Addressing the extent of property price inflation, Mr Kelly said that by 2007, “we were building half as many houses as Britain which is 15 times our size”. A consequence of this building boom was that the price of an average Dublin home cost “15 times the average industrial wage”. (more)