Irish Property Bubble - Crash Predictions

Crash Predictions

• In February 2000, William Slattery (then former Deputy Head of Banking Supervision in the Central Bank of Ireland) predicted a property price fall of 30%-50% possible if credit growth not curbed.

• The International Monetary Fund in 2000 stated that no industrial country in the last 20 years had experienced price increases on the scale of Ireland without suffering a subsequent fall.

• The International Monetary Fund in 2003 stated that residential property in Ireland was overvalued.

• The Economist news magazine suggested in June 2005 that a large bubble exists in the Irish market.

• The Economic and Social Research Institute in Ireland said that a bubble probably existed.

• The OECD and certain senior Irish officials of the Central Bank of Ireland agreed in November 2005 that Irish Property is overvalued by 15%. However this was only released to the public by The Irish Times shortly afterwards. The Central Bank denied that they had deliberately withheld this information to avoid triggering a crash, and in April 2006 said the housing boom may be "unsustainable" and poses a "significant risk" to the economy.

• Most economists think that property prices are unsustainable because rental yields have fallen below the risk free rate of over 3.5% offered by Government bonds.

• The Economic and Social Research Institute issued a statement on 18 April 2007 in light of the RTÉ documentary on 16 April 2007 stating that the only activities there is economic certainty in is cigarette manufacturing and undertaking.

• Many estate agents and banks continued to offer and promote 100% mortgages in the market until recently.