House prices may be undervalued by up to 26%, says Central Bank

House prices may be undervalued by up to 26%, according to a Central Bank report.

Ireland has experienced one of the most significant falls in house prices anywhere in the OECD. Only Japan has suffered a comparable fall in house prices. However, the Japanese contraction took place over a period of 82 financial quarters, compared to Ireland’s 16 quarters of decline.

Using four different economic models, the Central Bank economic letter completed by Gerard Kennedy and Kieran McQuinn, Why are Irish house prices still falling? found that prices “have fallen somewhat below the level prevailing market fundamentals would suggest,” by 12% to 26%.