Monday 28 May 2018

How real is risk of a fall in property prices? Even recession might not do it

The Central Bank's warning is good. Blindness to risk was the greatest error before the crash, writes Dan O'Brien

WARNING: Central Bank governor Philip Lane. Picture: RollingNews.ie
WARNING: Central Bank governor Philip Lane. Picture: RollingNews.ie
Dan O'Brien

Dan O'Brien

Is there "a material risk" that the value of your home will fall? The country's top central banker warned as much last week. As Philip Lane also happens to be an internationally respected economist, his words carry weight. Those same words led to a frisson of fear running down the national spine.

The longer-term national obsession with property prices is matched only by a more recent paranoia about property crashes. The trauma of the depression this country suffered in the half decade to 2013 has scarred the national collective consciousness. Anything that has echoes of the frenzy up to 2008, or the calamity thereafter, causes unease, if not near panic.

Since both the economy and property prices turned around five years ago, there have been periodic bouts of here-we-go-again hand-wringing. We are in one of those bouts now, despite prices nationally remaining 22pc below the peak recorded over a decade ago (they are also around a fifth below peak in the capital, where affordability issues are greatest).

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