A question of valuation

A property has two prices, the price you can get for it, or the net present value of its future cash flows.

If a €5 note was auctioned on Grafton Street and an unwise person bid it up to €20, then a surveyor would value all €5 notes as €20 notes.

Likewise if an unwise person paid €2m for a house with a net present value of €0.5m then a surveyor would value all similar houses at €2m. Almost all of the Irish banks’ reckless lending was done using surveyors valuations. These valuations were as good as money. This is the valuation error that created the property bubble and bankrupted the country.

John Corcoran


Co Dublin

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