IRELAND’S PROPERTY CRASH is among the worst in the history of the world, and it may take decades before prices return to their peak values, according to new research from the Central Bank.
A paper comparing Ireland’s financial collapse to other major collapses in recent decades shows Ireland’s property crash has seen prices fall from their peak values at a steeper and more sustained rate than at any other time in history.
The only comparable case in which property prices fell so dramatically was in Finland, where the collapse of the Soviet Union led to a major economic crash in the early 1990s – and where property prices fell by almost half in four years. In Ireland a similar collapse occurred within five years.
In Finland’s case, however, it took 21 years for prices to match their 1990 peak – with little to indicate that Ireland’s recovery could be any quicker.
The only other case in which prices had fallen by comparable amounts is the ongoing property slump in Japan – where prices peaked in 1991 at the top of an immense property bubble and have continued to fall steadily since.
Ireland’s property decline, illustrated in green, is among the sharpest in modern history. Image: Central Bank of Ireland.
The paper notes, however, that there were “persistent deflationary pressures in Japan” which continue to take an effect on such prices.
The scale of the impact on Ireland, the paper says, may be fuelled by the fact that Ireland’s crash has coincided with a global downturn.
“The scale of the global recession and the synchronised contraction in output across a number of advanced economies may be a key differentiating factor between the resolution of the Irish episode and the Nordic example,” the authors state.