Meet University College Dublin economist Morgan Kelly. He’s predicting Irish house prices will fall a solid 80 per cent in coming years.
From the Irish Times:
In a presentation that drew several collective intakes of breath, Mr Kelly predicted that house prices would fall by 80 per cent from peak to trough in real terms…
Sparing no blushes, he said professional economists in the Central Bank and the Economic and Social Research Institute “need to look very closely at their analyses of the Irish economy and figure out what went wrong”.
Mr Kelly said Ireland’s “reputational capital” had been damaged by “chancers” such as ex-Anglo Irish Bank chairman Seán FitzPatrick, who had been abetted by “buffoons” such as former financial regulator Patrick Neary, Minister for Finance Brian Lenihan and the Taoiseach.
While pronunciations of imminent asset crashes make for good publicity for economists (and their universities), to his credit, Kelly was opining on the coming of the bursting of the Irish housing bubble as early as December 2006.
And if this particular forecast proves true, it would return Irish house prices to 1993 levels, according to EconomPic data, which has a nice chart of housing on the Emerald Isle reproduced below.
Property tax revenues, by the way, are a big component of Ireland’s public finances. In today’s FT for instance, we’re told declines in stamp duty and other property taxes has already contributed to a 14 per cent fall in total tax revenue for 2008.
Now, where’s that IMF number again?
Related links:
The Irish Dr. Doom… or just an exaggerating economist? – EconomPic Data
I, Ireland – FT Alphaville