'even worse recession ahead' if property market is not stabilised

Economist Peter Bacon has warned that Ireland faces a recession "more protracted and more severe than the one we are already in" if the Government fails to intervene in, and bring stability to, the property market.

"The market went to dizzying heights and now it's going to dizzying lows," Mr Bacon told the Sunday Independent, as he described how property prices were now being driven down by speculative forces in much the same way they had been driven upwards in the boom years.

"Just as it [the property market] overshot and went on a random walk on the way up, it is doing the same thing now on the way down. Now people will say it will reach a natural level, but there isn't a natural level.

"What you had were speculative forces driving the market up, and what you have now, in effect, are speculative forces driving the downward path that we are on at the present. It's within that nexus that an intervention is necessary if the Government desires to bring about stability in the market," Mr Bacon said.

Source: Independent.ie