RELAND WILL see more demolition than construction of houses over the next decade, as the economy struggles to recover from the collapse of the housing market and the emergence of “zombie” banks, UCD economist Morgan Kelly told the conference.

In a presentation that drew several collective intakes of breath, Mr Kelly predicted that house prices would fall by 80 per cent from peak to trough in real terms.

“Construction, but not demolition, of residential and commercial property will fall to zero for the foreseeable future,” he said.

Low levels of education among those employed in construction – where worker numbers peaked at about 280,000 – meant retraining would not be straightforward.

Recovery will be slow: “It has taken us 10 years to get into this situation – it will in all likelihood take us 10 years to get out of it.”

Mr Kelly said he had been hailed as being extremely prescient as a result of his warnings in relation to the property bubble, when in fact he and a handful of other “amateurs” were merely stating what was obvious.

Sparing no blushes, he said professional economists in the Central Bank and the Economic and Social Research Institute “need to look very closely at their analyses of the Irish economy and figure out what went wrong”.

Mr Kelly said Ireland’s “reputational capital” had been damaged by “chancers” such as ex-Anglo Irish Bank chairman Seán FitzPatrick, who had been abetted by “buffoons” such as former financial regulator Patrick Neary, Minister for Finance Brian Lenihan and the Taoiseach.

I think maybe Morgan needs a sit down. His predictions are getting a bit sensationalist.

I think maybe Morgan needs a sit down. His predictions are getting a bit sensationalist.

“Construction, but not demolition, of residential and commercial property will fall to zero for the foreseeable future,” he said.

I think maybe Morgan needs a sit down. His predictions are getting a bit sensationalist.

Maybe, but it's a welcome counter to the VI sensationalist crap of the past 10 years.

While not neccessarily accepting that Morgan is being sensationalist, maybe a bit of extremism on the bear side will focus attention towards the mean, and more realistic bears will be given more credence.