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News : Property Last Updated: Jun 8, 2011 - 6:24 AM

Irish Residential Property Prices fell by 12.2% in the year to April; Dublin apartments down 53% since Feb 2007
By Finfacts Team
Jun 7, 2011 - 2:54 PM

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Source: CSO

In the year to April, Irish residential property prices at a national level, fell by 12.2%. This compares with an annual rate of decline of 11.9% in March and a decline of 13.7% recorded in the twelve months to April 2010. Apartments in Dublin almost 53% lower than they were in Feb 2007

The Central Statistics Office (CSO) said today that residential property prices fell by 1.0% in the month of April. This compares with a decline of 1.7% recorded in March and a decrease of just 0.7% in April of last year.  In Dublin residential property prices fell by 0.7% in April and were 13% lower than a year ago. Dublin house prices fell by 0.4% in the month and were 12.6% lower compared to a year earlier. Dublin apartment prices fell by 1.8% in the month of April and were 14.1% lower when compared with the same month of 2010.

The price of residential properties in the Rest of Ireland (i.e. excluding Dublin) fell by 1.3% in April compared with a decline of 0.5% in the same month of last year. Prices were 11.7% lower than in April 2010.

Overall Decline: The CSO said house Prices in Dublin are now almost 46% lower than at their highest level in early 2007. Apartments in Dublin almost 53% lower than they were in February 2007. The fall in the price of residential properties in the Rest of Ireland is somewhat lower at just over 36%. Overall, the national index is 40% lower than its highest level in 2007.

Goodbody chief economist, Dermot O'Leary commented:

From the peak in early 2007, residential prices in Ireland have now fallen by 40%, with larger decline seen in Dublin and for apartments in particular.

House price declines continue… - House and apartment price declines continued to be widespread across the country in April, according to the new residential price indices from the CSO. Nationally, residential prices fell by 1% in April (-1.7% mom in March), with the annual rate of decline standing at -12.2% (-11.9% in March). There were similar monthly declines for houses and apartments across the country, although the annual rate of decline in the price of apartments (-15%) continues to exceed that of houses (-12%).

…and are now down 40% from the peak, with significant regional differences - Residential property prices in Ireland have now fallen by 40% from peak 2007 levels, but there is a significant difference in the scale of declines between houses and apartments and by geographical area. House prices nationally have fallen by 38%, but there is a large difference between houses in Dublin (-46%) and outside Dublin (-36%). Apartment prices have fallen by 53% in Dublin and by 51% across the country. Given these differences, we have been of the view for some time that the Irish market should be analysed on a regional basis. On the evidence thus far and the fact that there is still a surplus of properties available outside of Dublin, residential prices outside the capital have further to fall.

Prices now at 5 times earnings - While the CSO Residential Property Price Index does not provide an average house price, using the Irish Life and Permanent data we can extrapolate that the national average house price is now €180K which is back to levels last seen in early 2002. We estimate this is c.5 times average earnings, which in line with levels last seen in 1998. It is clear that an unprecedented correction has taken place, but until the banking sector shows real signs of rehabilitation, facilitated by the restructuring efforts currently ongoing, there is little reason to believe that prices will rise.

Farnk Conway of Moneycoach.ie commented:

Despite much hope that the housing market had seen the worst of the price drops, month-on-month falls of 1% or more during the first four months of 2011 reveals that the housing market has yet to 'bottom out'.
A number of critical factors continue to place a serious drag on the housing market including:

Access to finance - this is a major problem for many would-be first time buyers. In fact, if anything, access to finance has deteriorated over the course of the past 12 months, which has been confirmed with the most recent Irish Banking Federation report which highlights the dramatic falloff in mortgages being originated by banks. Between Q1, 2010 and Q 1, 2011, mortgage lending fell by 53%;

  • Rise in unemployment - the labour market continues to weaken. This is resulting in more people being unable or unwilling to apply for a mortgage;
  • Property price uncertainty - Falling property prices is resulting in fewer borrowers being prepared to take the plunge into the property market as they prefer to take a wait-and-see approach in respect of property values;
  • Rising mortgage interest rates - rising mortgage rates (by individual banks and the ECB) is resulting in some prospective buyers refraining for buying;
  • The property market continues to the victim on a series of significant events that show little sign of abating. Until access to finance and employment situations improve, buyers will be largely unable or unwilling to commit to purchasing.

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