Ireland could face another property crash if market regulations are relaxed, former deputy governor of the Central Bank Stafan Gerlach has warned.

Mr Gerlach, who left the bank earlier this year to become chief economist at BSI Bank in Zurich, said the construction industry and politicians are putting pressure on the regulator to relax the loan-to-value and loan-to-income ratios on mortgage lending introduced last year.

Quoting from an article he wrote for the think-tank Project Syndicate, Newstalk reported several concerns raised by Mr Gerlach.

Among them is that while housing bubbles are easy to spot, there are a number of conflicts of interest that make it hard to take action as the market spins out of control.

“The obvious question is why nobody stepped in before it was too late,” he wrote of the previous crash.

“The answer is simple: while the bubbles are inflating, many people benefit. With the construction sector thriving, unemployment falling, and banks lending freely, people are happy – and politicians like it that way.”

Today, he said, Ireland has been experiencing a recovery in prices, rising in Dublin by about 50 per cent from the trough of 2010.

“Is Ireland setting itself up for another devastating crash? The process is simple. Rising prices trigger a surge in building activity, which creates job opportunities for young, low-skill workers, whose employment options are otherwise limited, and generates large profits for property developers and builders.

“In fact, a telltale sign of a bubble is that second-rate developers suddenly are able to earn billions.”