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News : Property Last Updated: Oct 3, 2011 - 5:35 AM

Irish House Prices: Asking prices fell more than 3% in third quarter according to Daft.ie and MyHome.ie
By Finfacts Team
Oct 3, 2011 - 3:32 AM

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Irish House Prices: Asking prices fell more than 3% in the third quarter according to Daft.ie and MyHome.ie web services.

Asking prices for residential property around the country fell by an average of 3.5% between June and September, according to the latest report published by property website Daft.ie. This compares to a fall of just over 5% between March and June. The average asking price is now just under €195,000, compared to €366,000 at the 2007 peak.

In Dublin, asking prices fell by an average of 4.5% over the past 3 months, with prices now 55% below the peak in some parts of the city. Asking prices in Cork and Waterford cities fell by up to 5%. In Limerick city, which has seen some of the smallest falls from the peak, prices fell by over 8% in three months. In contrast, asking prices in Galway city actually rose by just over 1% over the summer, although they are still 18% lower than a year ago. Asking prices also rose noticeably in Carlow and in Monaghan, but typically outside the main cities, they fell by about 2%.

The trend of steady falls in asking prices has continued into the third quarter of 2011 with the latest figures from property website MyHome.ie showing prices are down 42% from their peak level in 2006. In Dublin they are down 48% from peak levels.

In Q3 the average mix-adjusted asking price for properties fell by 3.2% nationally and by 3.8% in Dublin. The annual rate of decline nationally is 13.8% while in Dublin the corresponding figure is 15.2%.

Based on average mix-adjusted asking prices, the average price for a home nationally is now €241,000 as opposed to €249,000, 3 months ago. In Dublin the corresponding figures are €275,000 versus €286,000. The average price of a second hand home is €243,000 down 3.3%.

The author of the report, Annette Hughes, director DKM Economic Consultants said cautious consumer sentiment is contributing to low housing activity levels, while the euro financial crisis is casting a shadow on economic prospects.

"Although there was some positive economic news in Q2, Irish consumers remain cautious due to international and domestic concerns. On the one hand they are worried about the euro financial crisis and its impact on economic and employment growth prospects, while on the other they are concerned about household finances as well as continuing difficulties securing mortgage finance. But uncertainty around the contents of the forthcoming budget is the current big issue for households," Hughes said.

"For now these issues appear to be outweighing positive news from the Irish economy and the prospect of lower interest rates in the near future. As a result the downward price trend we have seen over the last five years looks set to continue for the remainder of 2011," Hughes added.

Ronan Lyons, economist with Daft.ie commented: "Conditions in the property market remain weak. When prices started to fall, there were two issues the market had to deal with from the boom-time, over-construction and correcting the relationship between house prices and rents. A third issue has now arisen - the lack of credit. Without a change in strategy by the banks, the outlook for house prices remains tough for the rest of the year, with a market of many sellers but few buyers able to borrow."

Sheila O'Flanagan, novelist and former IFSC staffer, says in a commentary in the Daft report: "For a real and definitive change to take place in the perception of the housing market in Ireland, a real and definitive change in people’s perception of their ability to service mortgages has to take place too. In order for them to make an informed decision, they need to be confident about their long-term employment prospects, the value of their net incomes and the direction of interest rates in the future.

The Irish economy continues to lose jobs and the government’s troika-led austerity measures continue to affect net incomes which makes it difficult for potential purchasers (and current mortgage holders) to feel confident about their ability to service their debt. However even if they are, they also are faced with an additional problem, the lack of liquidity in the market. This is not the same as a lack of available stock. The stock of houses, at 59,000 is close to the 18 month average and slightly lower than the 62,000 average in 2008-2009."

Download the Daft report (pdf)

Download the MyHome.ie report

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