The average price of a residential property in Ireland has fallen 43% since the peak of the real estate market and now stands at €210,000, according to the latest index from Daft, Ireland’s largest property website.
An ongoing mismatch between supply and demand in the housing market pushed asking prices down 3.1% in the first three months of the year, it also shows.
In Dublin, asking prices fell by 4.1% during the first quarter of 2011, while in Galway, prices fell by almost 5%. In Cork and Waterford, prices dropped by about 3%, while Limerick city saw falls of just 2% between January and April. Outside the main cities, asking prices fell by an average of 2.7%, the smallest fall in three years.
‘Prospective buyers find it difficult to get the finance, while owner-occupiers are often restricted by negative equity. As a result, the market is moving very slowly. Of the 3,000 properties posted for sale fifteen months ago at the start of 2010, one in three is still for sale, although in Dublin the figure is closer to just one in six,’ said Ronan Lyons, economist with Daft.ie.
Another study published today by DKM Economic Consultants on behalf of MyHome.ie places the average national asking price at €260,000. It says prices are down 4.1% on a quarterly basis, with the market enduring a drop of 37% nationally since its peak, and 43% in Dublin.
Both reports agree that it remains a buyer’s market. The average time it took to sell a property in the first quarter of 2011 was nine months, the same as a year ago, according to Daft. The average time in Dublin was five months, down only slightly year on year.
The MyHome.ie Property Barometer said the average time it takes for a property to go sale agreed varied from three months in Dublin to 13 months in Connacht and Ulster.
Commenting on the property market Eoin Fahy, chief economist at Kleinwort Benson Investments, said a first wave of house price falls had resulted from bubble prices, unemployment and the tighter supply of credit and he warned that a new set of problems may now be on the way.
‘A second wave of factors may keep downward pressure on house prices. This will be mainly due to higher interest rates, but there is also an outside risk to house prices from repossessions and even from strategic default,’ he explained.
‘In a strategic default, borrowers have such a negative view of the future that even those that can pay, don’t pay, as they can’t see why they should pay their mortgages each month when so many others will not,’ he added.
He also pointed out that existing mortgage borrowers would have to finance higher monthly repayments. ‘In many cases the extra strain could push borrowers into arrears and for some that could mean that they have to sell their homes, increasing the supply of houses on the market. Potential buyers, even those that are not significantly directly affected by the increase in mortgage rates, will be concerned that higher interest rates will lead to further house price declines, and may defer their purchase,’ said Fahy.
The moderating pace of price decline in Dublin is to be welcomed, as is the fact that affordability continues to improve, according to Annette Hughes, DKM director. But she added further price drops are likely over the course of 2011, partly as a result of impending interest rate hikes.
My Home managing director Angela Keegan said the figures indicated 2011 is going to be another challenging year. ‘While the stamp duty changes have attracted trader uppers back into the market, first time buyers face some difficult choices. They will have to weigh up the fact that prices may fall further with changes in mortgage interest relief which it appears now will be introduced at the end of the year,’ she added.