Irish house prices were undervalued by between 12% and 26% at the end of last year, according to new research from the Central Bank.
The research suggests that property prices could rise suddenly and significantly if the causes of the undershooting in prices were removed.
According to the Irish Times, the main reasons cited for the continued fall in prices are a lack of investor confidence, negative future house price expectation and an uncertain macroeconomic outlook.
Additionally, “the requirement for substantial deleveraging within the Irish financial system and the associated issue of mortgage credit availability are also considered as significant reasons for the decline.”
Residential property prices have almost halved since their peak five years ago. According to the Central Bank this is one of the largest ever declines based on a comparison of four decades of data from across the OECD.
The report said that just 11,000 new mortgages were issued last year, down from 10 times that number in 2006
Surveying 10 other international examples of very large declines in house prices, the average duration between peak and trough is six years.