Property price history offers no guarantees

TWO thing are remarkable about Finance Minister Brian Lenihan’s recent appearance before the Oireachtas Joint Committee on Finance and the Public Service.

First, an advocate for the buyer – the taxpayer – will normally argue that the price paid should be less but no, Lenihan’s guru, John Mulcahy, argues that the price paid by NAMA for impaired loans should be more.

Secondly, Mr Mulcahy tells us he has studied statistics going back to 1921 and concluded that, in the wake of an economic depression, prices increase within five to seven years to 70% or 80% of what they were before. Implicit in this argument is the assumption that what happened in the past will be repeated in the future. Oh, dear.

Did it not occur to Mr Mulcahy to ask why financial institutions, when advertising their wares telling us how well they performed in the past, were obliged to conclude with the warning that “past results are no guarantee of future performance”.

Brendan Casserly

Abbeybridge

Waterfall

Co Cork