Madam, - A report in your edition of July 10th quotes a spokesman for an estate agent as saying that my views on house price forecasts by agents and financial institutions were "not even worthy of comment".
Perhaps this spokesman, and those who forecast increases of up to 10 per cent this year - whereas house prices have now declined by almost 3 per cent - could answer one question: have they ever heard of the FED formula?
This, according to a former senior economist at the US Federal Reserve now lecturing at NUI Galway, works as follows. Typically, when house prices increase because of low interest rates and then interest rates increase, 18 months to two years later prices will fall. The European Central Bank began increasing interest rates in 2005. Were these estate agents and financial institutions not aware of the FED formula? If not, precisely on what basis did they continue to forecast such extraordinary price increases for 2007? They should at the very least publish the research on which they based their self-serving predictions.
My comments were not "scurrilous", as the agent's spokesman claims. What is scurrilous is that many young people were panicked into buying homes and taking mortgages for 30, 35 and even 40 years on inflated values. Those who benefited were those who made the predictions. Let us have less personal abuse and more answers. - Yours, etc,
GAY MITCHELL MEP European Parliament Offices, Dublin 2.