In April 2007, as the property collapse was only beginning to gather pace, Ulster Bank's internal analysts were predicting a worst-case scenario fall in house prices of 20 per cent.

The collapse turned out to be over 50 per cent on the value of the average family home.

“It was Europe’s biggest property bust,” according to Global Property Guide, which estimates the fall at 53 per cent, though some property values plunged by up to 70 per cent.

In the summer of 2007, Prof Morgan Kelly predicted a fall of between 40 and 60 per cent, with some high-end properties falling by up to 85 per cent.

However, at Ulster Bank, which was not covered by the bank guarantee but was exposed nonetheless to the collapse, not least through financing Seán Dunne's €380 million Ballsbridge hotel site purchase, analysts appeared to have bought into the "soft landing" scenario then being talked up by politicians, and the building and property sectors.

Key risks

“Alongside the key macroeconomic risks of rising unemployment, interest rates and faltering global growth,” the bank’s analysts wrote in their April 2007 review, “key risks come from downsizing in the construction labour force, wider unemployment and worst-case forecasts of circa-20 per cent house price correction.”

The review was written by Paddy O'Driscoll, the bank's head of property credit in the Republic, and Ronnie Hanna, head of credit, his opposite number in the bank's Northern Ireland operations.

It was published this week in volume three of the Oireachtas Banking Inquiry Report, which contains documentation behind some of the other evidence given to the inquiry.