Source: CSO

In the year to March 2012, Irish house / residential property prices at a national level, fell by 16.3%. This compares with an annual rate of decline of 17.8% in February and a decline of 11.9% recorded in the twelve months to March 2011.  Residential property prices remained unchanged in the month of March, according to the Central Statistics Office. This compares with a decline of 2.2% recorded in February and a decline of 1.7% recorded in March of last year.

In Dublin residential property prices rose by 0.7% in March and were 18.3% lower than a year ago. Dublin house prices increased by 0.7% in the month and were 18.4% lower compared to a year earlier. Dublin apartment prices were 18.9% lower when compared with the same month of 2011.

The price of residential properties in the Rest of Ireland (i.e. excluding Dublin) fell by 0.6% in March compared with a decline of 1.5% in March last year. Prices were 15.5% lower than in March 2011.

Overall Decline: House prices in Dublin are 55% lower than at their highest level in early 2007. Apartments in Dublin are 61% lower than they were in February 2007. Residential property prices in Dublin are 57% lower than at their highest level in February 2007. The fall in the price of residential properties in the Rest of Ireland is somewhat lower at 45%. Overall, the national index is 49% lower than its highest level in 2007.

Juliet Tennent, economist at Goodbody, commented:

Pace of Irish house prices falls slows in March with Dublin outperforming

Falls in the official index slow in March … - The official house price index from the CSO showed a slowing in the pace of decline in house prices in March. Residential prices were flat mom (month on month; -2.2% in February) while on a yoy (year on year) basis they fell 16.3% (from a 17.8% decline in February). This is the first slowing in the yoy rate of decline since July 2011 and means that nationally prices remain 49% below the peak.

…with prices in Dublin posting the first mom increase since May 2011 – On a mom basis, both Dublin houses and Dublin apartments saw prices increases of 0.7% and 2.3% respectively. This backs up recent survey data from Daft.ie and My home.ie which pointed to outperformance of the Dublin market relative to the rest of the country in Q1. This outperformance is likely to continue as recent census data showed that the vacancy rate in Dublin, at 8%, was lower than in 2006 and Daft.ie data showed that Dublin stock is at its lowest level since 2007. However, Dublin has experienced the most severe declines from the peak, down by 57% compared to a 47% decline for outside the capital, with Dublin apartments the worst performing category, down 62% from the peak.

Tight credit conditions will continue to weigh - In our recent report on the Irish housing market (What price is residential property really transacting for, 12 March 2012) we noted that, based on Allsop auction data, residential property is actually transacting at prices well below those suggested by the official data. Our analysis pointed to house prices falls of over 60% which translated into prices being close to long-term fair value. However, the limited access to mortgage credit will continue to weigh on prices.

David McNamara, economist at Davy, commented:

Residential property prices flat on the month

• This follows a 2.2% decline in February, with prices down 16.3% on the year;
• House prices fell 0.1%, while apartment prices increased 0.4% on February;
• However, property prices in Dublin did increase by 0.7%, with apartment prices up 2.3% on the month;
• Property prices fell 4.9% in Q1 overall, having declined 5.2% in Q4.

Today's data imply a peak-to-trough decline of 49.3%

• House prices have fallen 47.8%, while apartment prices are 60.9% from peak;
• In Dublin the peak-to-trough fall of residential property is 57.2%, with prices 45.5% from peak outside of the capital;
• In reality, property prices are probably closer to 60% from peak due to the lag in the CSO index and the exclusion of cash purchases from the data.

House prices nearing sustainable levels, but will likely undershoot

• As outlined in our recent report - Irish housing market - Affordability returns to sustainable levels, but credit constraints and uncertainty point to further declines, property prices will eventually fall 65-70% from peak;
• Despite affordability metrics looking favourable, credit constraints,excess supply and economic uncertainty will weigh on property prices;
• Whilst the flat index in March is a welcome reprieve, we expect property prices to continue to fall in the medium term.

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