Ireland's Finance Minister Brian Lenihan sounded confident when he was quizzed by a parliamentary committee in Dublin.
‘We are very near it on the basis of the figures that we now have about the yield from property. The yield is at an all-time high relative to the assets which is a clear, objective economic indicator that we are approaching the trough,’ he said.
But few are as bullish. A report by University College Dublin economist Morgan Kelly suggest that property values may only recover to less than half of their peak values and remain there for a decade or longer.
Prof Kelly had predicted in 2007 that property prices were set to fall by up to 20% and had been criticised for having such pessimistic views but the slump proved him correct.
His most recent gloomy outlook was presented in evidence in the High Court in Dublin in a legal application from leading Irish developer Liam Carroll who is seeking court protection for his debt ridden Zoe Group.
The rate at which the property market in Ireland is likely to recover is a key in the case. Carroll’s lawyers claim it will be sooner rather than later.
But Dutch owned ACCBank produced Kelly’s report as evidence that it will not. It wants the appointment of a liquidator over unpaid loans of €136 million.
Zoe Group is seeking court protection from liabilities of €1.35 billion, arguing an improvement in the property market could increase the value of its properties from €644 million based on distressed sales over six months to €1.2 billion over three to five years. The group argues it has a reasonable prospect of survival based on a three-year plan supported by its main creditor banks.
The court heard Prof Kelly predicted property price falls to be “large and prolonged” with values possibly returning to mid-1990s levels of about one-third to one-half of peak values. Michael Cush SC, representing the Zoe group companies, said Prof Kelly was “much more pessimistic” than other economists
