It was the property bubble that fueled the boom and bust in Ireland, ruining the country to the extent that we needed a bailout from the IMF and the EU to stop us going completely bankrupt and unable to pay for vital pubic services.
It was a humbling, frightening experience. We're only just emerging from the consequences, and as a country we will be paying the bill in our taxes for years to come.
So we must have learned our lesson, right? Ireland could never fall into that trap again, right?
Well, that is far from certain because there are signs already that we are still suffering from property mania here, and we may even be in the early stages of another property boom. What is certain is that the property market in Ireland is a complicated mess.
Over the past two years as we emerged from the bailout and tentative economic recovery began, property prices in the better parts of Dublin and a few other choice areas around the country started to recover. In some of these areas in Dublin each of the last two years has seen prices increase by up to 20 percent, or even more.
In the rest of the country recovery has been much slower or has yet to start. Even in the best areas in Dublin, property has still regained only half of the 50 to 60 percent fall in value since the peak of the bubble.
Given that the peak values were ridiculously inflated, that may be no harm. But the problem is that there is little sign of the new surge in prices coming to an end.
The bursting of the bubble and the consequent banking collapse had two effects. So many builders and developers went bust that construction of new homes came to a complete stop.
And the collapse of the banks meant that it became impossible to get a mortgage even when buyers did find a property to buy. The property market ground to a halt.
What is happening here now, as the market slowly starts to function again, is that too many buyers are chasing too few homes. The lack of supply is driving up prices rapidly, and even though some construction is underway again it is meeting only a fraction of the demand.
So we are getting the rapid increase in prices we have seen, between 20 and 30 percent in the better areas in Dublin over the past two years.
To a large degree this is a false market. The headlines about prices in Dublin going up 20 percent a year, although accurate, are misleading because they refer to such a small number of sales.
The other factor in the partial boom that is now emerging is the number of cash buyers in the market over the past two years. In spite of the crash a lot of people here, usually older people, still have money and have been snapping up property as soon as it becomes available, both new and secondhand homes. Younger people who are first time buyers are being priced out of the market, even when they can get a mortgage.
To try to cool the market down, the Central Bank is proposing a new rule for the banks which will require buyers to have 20 percent of the price of a property themselves. Or to put it the other way, they are telling the banks that in the majority of cases the maximum loan they can give can only be 80 percent of the property price.
Given that the average three bedroom house in most areas in Dublin is now getting a price of at least €350,000, this means that a young couple trying to buy the home will need to have €70,000 in savings. Effectively this would put buying a home beyond the reach of most young people. The proposal has caused widespread concern here because it would mean that only young couples with rich parents able to give them a chunk of money will be able to buy.
Trade union bosses, community leaders and even government ministers have criticized the proposal in the past few weeks and say it is far too restrictive. A decision on the new home loan rules for the banks is being taken this week by the Central Bank Commission (which includes outside economists and experts as well as the Central Bank Governor Patrick Honohan).
The prediction last weekend was that the 20 percent mortgage deposit requirement would be reduced to 15 percent for this year and would then rise by one percent each year over the next five years.
That may seem tough, but it is simply the new Central Bank governor doing the job he is supposed to do to stop people from over-borrowing and to protect the banks from another property collapse.
It's worth remembering that if the Central Bank had been doing this when the property bubble was inflating between 2000 and 2007 and 100 percent mortgages were being dished out, the banking collapse might not have happened and the financial crisis might have been averted.
We can't have it both ways. There has been huge criticism of financial regulation here during the boom, when regulators were asleep at the wheel. So there is a strong argument that the Central Bank must be allowed to do whatever it thinks is necessary to snuff out another boom before it inflates.
Other countries -- Canada is one example -- have a 20 percent deposit requirement so the figure is not as outrageous as some are suggesting.
Having said that, the norm when this writer bought his first home back in the 1980s was that you needed a 15 percent deposit. One building society (savings and loans) here at the time, the old First National, gave 90 percent loans, and it was thanks to them that this poor journalist was able to get on the property ladder back then.
Mind you, at that time the maximum loan could not be more than two and half times a couple's combined salaries, whereas the current proposal for the Central Bank is to limit loans to three and a half times salary.
An unfortunate side effect of the inability of so many young people here now to buy a home is that rents are soaring, increasing by at least 10 percent each year over the past two years with no end in sight. And having to pay higher rents means that young people will find it even harder to save the money for a deposit, whether it is 20 percent or 15 percent.
Even going out to less favored or run down suburbs of Dublin does not offer a solution for most young couples. Looking across all of the greater Dublin area, including "problem" neighborhoods, the average price of a home is now €263,000.
At 15 percent, buyers would need €39,450 up front. At 20 percent, they would need €52,600. Either amount would take the average young couple many years to save, especially with rents at current levels.
As we said earlier, the property market here is now a complicated mess and it's going to take time and careful regulation to sort it out. Doing nothing is not an option. House prices in Ireland are now rising at six times the rate of increase in the EU as a whole.
The solution lies in two areas. Firstly the rising price problem is mainly due to a lack of supply, so increasing construction as fast as possible will sort that out eventually, although it will take time.
Secondly, some way should be found to penalize older buyers who are using accumulated wealth to invest in properties to rent. A possible way might be to require them to put up at least 50 percent of the price of any home they are buying that will not be their primary residence. If that were done it might be possible to allow younger first time buyers to borrow 90 percent of the price of a new home.
However, because first time buyers account for around half of all buyers, this might not be sufficient to meet the requirements of the Central Bank in protecting banks from another downturn.
While all this is going on, it is also a fact that there are increasing signs of the return of property mania here. Last week one of the national papers in Ireland had a free 64-page magazine on property.
The usual weekly property sections of the papers are growing rapidly in size again and at least some of this stuff is aimed at investors. Property remains one of the most favored investments here for people with spare cash.
As we pointed out earlier, there are many people here who have accumulated wealth. With so few homes, either new or secondhand, coming on the market, they are desperate to find a property to put their money into. That is driving up prices and will continue to do so.
During the mad days of the boom, of course, Irish people borrowed like lunatics to buy investment apartments and homes not just in Ireland but in places like Bulgaria and the Cape Verde islands. That could not happen again … could it?
Believe it or not last week several papers here had big advertisements for a property roadshow called America Homes Expo, which is holding property exhibitions in Dublin, Cork and Belfast over the next week. For several days in each city potential buyers will be able to go along and learn all about investment opportunities in Florida.
Some of the come-on lines from the ad were “bank repossessed investments from $95,000,” "pool homes from $185,000, “70 percent mortgages available,” “seminars throughout the day.”
It's like the good old days. Nothing can go wrong, go wrong, go wrong ...
The Irish love affair with property as a way of getting rich shows no sign of ending, despite the property crash that brought down our economy.