'Anecdotes' led to Morgan Kelly claim
Dr Doom's 10,000 mortgage defaults of €1m shock based on a press release story
Ireland's foremost 'prophet of doom' Professor Morgan Kelly has admitted that his latest startling pronouncement was based on a 15-month-old newspaper report, which a further investigation by the Sunday Independent has found to be based on a press release backed up in part by "anecdotal evidence".
Prof Kelly shocked an audience at the Kilkenny Arts Festival last weekend by claiming that the losses of the Irish banks could spiral by several billion more than previously estimated as a result of 10,000 mortgages given out at the peak of the bubble to "lawyers, solicitors and estate agents" to purchase properties valued at €1m to €2m, which they can not now repay.
Last week he admitted to the Sunday Independent that the information on which he based his prediction came from a story written by the commercial property editor of the Irish Times in May of last year.
While that report did not directly identify the source of its estimates for the 10,000 mortgages that it said had been given to "accountants, lawyers and other professionals", it did conclude with a warning from the Irish Brokers Association that with the value of many of those €1m to €2m properties now down by 50 per cent "another disaster is waiting to unfold".
Contacted by the Sunday Independent, a spokesman for the IBA confirmed that the information in the report had been issued in a press release in April of last year. Asked how the IBA had come up with its projections, the spokesman said the IBA's conclusions were drawn from its own estimates, as well as "anecdotal evidence" and "internal conversations" with brokers.
But while Prof Kelly's dire warning might have terrified his Kilkenny audience, stamp duty statistics supplied by the Revenue Commissioners do not bear out his argument.
According to official figures, a total of 4,496 properties valued at over €635,000 were sold in 2006 -- the year generally acknowledged as the "peak of the bubble".