Irish house prices could fall by as much as 70% from their peak and rival the steepest drops ever recorded in the advanced world, a leading housing researcher has warned.
Kevin O'Rourke, professor of economics at TCD, said it would be better for the economy if house prices here rapidly hit the bottom because otherwise the slump could extend for years.
"I am one of the more pessimistic ones," he said. "The more prices rose before the peak the more they have to fall after the bursting of the bubble."
O'Rourke said that international research suggests that when house prices fall for more than 30 successive quarters, or seven to eight years, that price falls "take on a life of their own" because buyers and sellers come to expect even more price falls.
Housing experts say that many parts of the housing market here have already dropped by over 50% from the peak prices reached in 2006.
Research published last week with TCD's Agustin Benetrix and University of California professor Barry Eichengreen showed that Finland recorded the deepest peak-to-trough house price drop of almost 51%, in a collapse that lasted for more than six years when its economy crashed in 1989. Ireland's property prices fell 32%, accounting for inflation, in the country's last housing crash in 1979.
O'Rourke said that the turning point in Irish house prices remained too difficult to predict because of the huge uncertainty about growth rates of the economy in the coming years.
"The world's current economic problems started when housing bubbles burst in several advanced economies. Economic recovery without a housing market recovery is unlikely to be sustained," said Benetrix.