A CENTRAL Bank report claims that Irish home values have been "overcorrected" by between 12 and 26pc.
A number of factors have combined to cause the continued fall in prices, according to the study, with consumer confidence being the single biggest factor.
But property prices could rise suddenly and significantly if the causes of the undershooting in prices were removed.
States the report: “Investor conidence, a key driver in a buoyant market, has been critically impaired and will likely take some time to recover”.
According to RTE News, the report claims that - as of the third quarter of last year - the overall drop in Irish housing prices was second only to the 1990s housing crisis in Japan.
Authors Gerard Kennedy and Kieran McQuinn, however, note that Ireland’s housing collapse has happened much quicker than that of Japan.
Irish house prices have now been in decline for 18 quarters, compared to Japan where prices fell for 82 consecutive quarter.
The bank’s researchers used four separate models to assess property prices.
One model found that prices were 26pc below what economic fundamentals in the economy would warrant.
Two other models found that prices were 16 per cent to 18pc undervalued.
A fourth model suggested that they were undervalued by 12pc.