To explore this issue, the panel to the left in Figure 2 shows the share of Irish banks’ lending that was accounted for by property. Here speculative property-related lending includes the construction, buying and developing of property or other projects which are not pre-let or pre-sold, that is, that are at risk of not generating any income stream or sales revenue.
The panel shows that banks’ property-related lending rose from about 40% of total loans in 1999 to about 65% by 2007. It is also of interest to look at lending to business sectors as a percentage of GDP which is shown in the right-hand panel of Figure 2.