There is a commonly held view on this forum that house prices only entered bubble territory from, roughly speaking, 2000 onwards, and that price increases up to then, though they appeared dramatic at the time, were justified by increases in disposable income and employment.
If we take the Dec 2000 avg price per the PTSB/ERSI index of €174,071:
esri.ie/irish_economy/perman … tables.pdf
…and adjust for inflation (and assuming 2.5% YTD inflation for 2008) we arrive at an inflation adjusted price in mid-2008 money of €231,570.
Taking the May 2008 price per the PTSB/ESRI index of €275,176, we find that prices have ALREADY come down by 45% of the difference between the inflation adjusted 2000 value and the highest value per the PTSB/ESRI which was €311,078 (Jan '07).
Of course, there are quite a few caveats and flaws in the argument, for example:
(1) When bubbles burst, prices generally overshoot in the downward direction. Accordingly, prices may well reduce to lower than that 2000 adjusted value.
(2) The property price bubble may have started before 2000.
(3) The oversupply issue (the biggie)
(4) If the Irish economy ends up in serious trouble, e.g., Finland early '90’s scenario involving banking bailouts and the like, prices may significantly overshoot in the downward direction, even more so if the issues are badly handled.
(5) The PTSB/ESRI data may be incorrect.