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News : Irish Economy Last Updated: May 24, 2012 - 3:51 PM

Irish house prices fell by 16.4% in the year to April 2012
By Finfacts Team
May 24, 2012 - 2:23 PM

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In the year to April 2012, Irish houseprices at a national level, fell by 16.4%. This compares with an annual rate of decline of 16.3% in March and a decline of 12.2% recorded in the twelve months to April 2011.

The CSO said that residential property prices fell by 1.1% in the month of April. There was no change in residential property prices recorded in March. A decline of 1.0% was recorded in April of last year.

In Dublin residential property prices rose by 0.5% in April and were 17.3% lower than a year ago. Dublin house prices increased by 0.2% in the month and were 17.9% lower compared to a year earlier. Dublin apartment prices were 15.3% 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 2.0% in April compared with a decline of 1.3% in April last year. Prices were 16.1% lower than in April 2011.

Overall Decline: House prices in Dublin are 55% lower than at their highest level in early 2007. Apartments in Dublin are 60% 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 47%. Overall, the national is 50% lower than its highest level in 2007.

Irish house price fall from 2007 peak maybe as high as 68%; Prices back to fair value

David McNamara, economist at Davy, commented:

Property prices down 1.1% on the month

  • The 1.1% decline in property prices in April follows a pause in the index in March;
  • Prices are now down 16.4% on the year;
  • House prices fell 1.2%, while apartment prices increased 2.1% on the month.

Today's data imply peak-to-trough declines of 49.9%

  • House prices have fallen 48.8% from peak, while apartment prices have declined 60.9% from peak;
  • The peak-to-trough decline in Dublin is 57.2% and is 46.6% outside the capital;
  • However, 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;
  • Indeed, the flow of mortgage transactions used to determine the index level is now at a record low;
  • Recent IBF data showed that lenders issued just 2,630 new mortgages in Q1, down 19.3% on Q1 2011.
CSO index unreliable estimate of property prices
  • The increasing prevalence of cash purchases in the market, evidenced by the recent success of property auctions (Auction data point to peak-to-trough declines of 60% [pdf], means that the CSO index is becoming a less reliable indicator of price movements;
  • The introduction of the long-mooted national house price register would provide much-needed visibility on current prices;
  • Despite the introduction of a number of government initiatives in Budget 2012 to support the mortgage market, access to credit is severely constrained;
  • We maintain our view that property prices will eventually fall by 65-70%.
Juliet Tennent, economist at Goodbody, commented:

Pace of Irish house price declines picks up again in April but two speed market becoming apparent 

Falls in the official house price index accelerated again in April... - The official house price index from the CSO showed a quickening in the pace of decline in house prices in April. Residential prices fell 1.1% mom in April (flat in March) while on a yoy basis they fell 16.4% (from a 16.3% decline in March). On the official measure prices nationally are now 50% below the peak. 

…but prices in Dublin register a second consecutive mom increase - For the first since February 2007, both Dublin houses and Dublin apartments saw a second consecutive mom increase in prices, rising 0.2% and 2.6% respectively. Outside the capital prices continued to fall (-2.0% mom). This divergence was also apparent in the latest Daft.ie rental survey released earlier this month which pointed to increases in rents in the urban areas of Dublin and Cork while rents outside of this continued to contract. However, in terms of sales prices 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, where despite the rise in prices in the last two months, are still down 60% from the peak.   

Tight credit conditions will continue to weigh - Supply and demand influences suggest that the two-speed Irish housing market is likely to continue. However, the limited access to mortgage credit that is common to both urban and rural markets will ultimately continue to weigh on prices particularly outside Dublin. 

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