House prices could take 22 years to recover, warns Central Bank report
IT COULD take up to 22 years for residential property prices to recover fully, a research paper produced by staff in the Central Bank indicates.
The paper looks at 147 price collapses internationally and concludes that the Irish home price collapse is the most expensive of those.
Economists at the Central Bank said it may be another two or three years before economic growth returns to 2007 peak levels.
The academic paper looked at crashes in three Nordic countries and Japan to estimate how much longer the Irish crisis will continue.
Their research found that Ireland’s banking crisis is the most expensive of 147 crashes they examined.
This means it could take between 11 and 22 years for prices to recover to their boom levels. The property crisis here is already five years old.
However, mortgage specialists said the current indications were that prices had stabilised and people did not want to see prices return to highs during the boom, when people over-borrowed to buy a house.
The economists also said that unemployment will remain elevated for some time. They also concluded it could take four to five years for banks to return to profit.