The result was an average output loss of 8% of GDP, reflecting greater effects on consumption and banking systems thus making house price busts more costly than those associated with equity prices busts.
Given the importance of the housing market for financial stability, it is instructive to explore whether and how the build-up of imbalances in the Irish property sector before the crisis appeared on various macro prudential indicators. One conclusion we can draw from this exercise is that even simple measures can be useful for guarding against a build-up of risk.