How important is the property market to the Irish economy? With about €90bn of property-related assets jamming up the balance sheets of the main banks, the obvious answer is very important. But of course those are legacy assets; what of future importance?

In the immediate future the property market, at least the residential segment, will barely merit attention from economic planners. Next year this country will build 10,000 units at best, a level of construction activity last seen in 1970. Some estimates suggest there is an overhang of 57,000 second-hand homes and apartments throughout the country.

Some day, most likely post-2012, housing demand may recover and eventually may creep back up to 40,000 completions a year, but thats it. Not within the next decade, maybe even longer, will housing activity again reach the boom levels of 90,000 completions a year.

On the commercial side the overhang is even more pronounced. London-based consultants Capital Economics estimate that one-fifth of all Dublin office space is now vacant, the highest vacancy rate of any major European capital. Vacancies feed into lower rents, and according to the same data, prime office rents have plunged by almost a third since this time last year.

Nobody has any idea when the market will again touch the peaks of the boom years, although Nama planners are optimistically talking about a seven- to nine-year property cycle.

These figures would suggest to any sensible person that the market is in for a painful contraction, and consequently it would be best if the government and the financial system learned to cope with the new uncomfortable reality. It's pointless trying to postpone the adjustment; instead it should be all about designing responses to it.

It's also worth pointing out that, as in any adjustment, there will be two parties on either side of the new pricing levels, winners and losers. Affordability will improve for younger buyers, and the net debt-to-income ratio of the next generation will be more manageable and prudent. No longer will one generation of Irish people simply transfer huge wealth to another generation, using borrowed money, most of it lent by foreign banks.

Those establishing businesses will benefit from lower rents, and multinationals will benefit from lower entry costs for setting up business in Ireland. Banks will be able to redirect credit to previously neglected segments of the economy. The more important segment of the economy, exporters, will benefit as lower property costs here give them increased competitiveness on world markets.

All of this is good. But not everyone is happy to square up to and accept the new property-light era. A mutually-re-enforcing group of developers, bankers and arguably government politicians appear to be desperately trying to hobble Ireland's future economic performance by linking what's good for the property market with whats good for Ireland Inc.

Last week the legal team representing Liam Carroll's Zoe group of companies told Justice John Cooke that the survival of the companies was important for the entire economy. On one reading it is. That reading is based on what happens to bank balance sheets and the stranded assets clogging them up. But there is a wider view that the national economy needs to wean itself off property as an asset class, and one of the obvious ways to do that is to liquidate the insolvent companies and mark down the excess stock.

Unfortunately nobody in business or finance seems interested in taking that most obvious route.