Property prices will fall further before recovery
Saturday February 02 2008
HOUSE prices are set to fall further before the end of the summer but the property market should recover by the end of the year, experts said yesterday.
They were reacting to figures from the Economic and Social Research Institute (ESRI) and Permanent TSB that showed house prices dropped in value by 7.3pc last year.
The decline is the biggest since the index was first compiled in 1996.
Permanent TSB's Niall O'Grady said the bank expects prices to drop another 5pc before they pick up later this year.
And Goodbody economist Deirdre Ryan predicted falls of 7pc in the next few months.
Ms Ryan said the fall in house prices was a positive development as there was too great a supply of housing in the market at the moment.
Alan McQuaid of Bloxham Stockbrokers said the drop in house prices was likely to accelerate in the first half of this year. But lower interest rates from the European Central Bank in the second half of 2008 should lead to a recovery in the property market by year end.
The house price index, compiled by the ESRI and Permanent TSB, shows that the average price paid for a house at the end of 2007 was €287,887, a drop of almost €23,000 from a year earlier.
Prices in Dublin fell more dramatically, with the average house in the capital now almost €30,000 cheaper in December than a year ago.
Dublin prices now average €397,507.
Second-hand houses lost almost €28,000 of their value in December compared with the same month a year earlier. The average second-hand house in the State is €321,498.
Permanent TSB's Niall O'Grady said the fact that rents were rising at 12.3pc a year meant investors would soon come back into the market.
Potential first-time buyers currently renting would also decide that rising rents mean it makes more sense to buy, Mr O'Grady said.
- Charlie Weston Personal Finance Editor
