Irish house prices fall twice as fast as a year ago
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Monday August 11 2008
Irish house prices dropped 0.6 percent in June, capping the property market's worst first-half performance in more than a decade.
House prices fell 5 percent in the six months through June, almost twice the pace recorded a year earlier, according to an index published today by Dublin-based Irish Life & Permanent Plc. From a year earlier, prices fell 9.7 percent.
Ireland's largest lenders have raised rates and tightened loan-to-value ratios on mortgages amid the global shortage of credit that began a year ago, worsening the housing slump.
''Price reductions are continuing nationally,'' Niall O'Grady, business strategy manager at Irish Life, said in a statement today. ''While there have been reductions in all segments of the market, the sharper fall in the price of new houses reflects a more aggressive approach by developers in order to stimulate some demand.''
Prices for new homes have dropped 10.1 percent in the last 12 months, while prices for existing properties have fallen 8.8 percent, according to the index. The average price paid for a house in June was 273,392 euros ($411,291), a drop of almost 30,000 euros from a year earlier.
Hurt by falling property demand, mortgage growth is cooling and construction is shrinking at a record pace, threatening economic growth.
A separate index by Ulster Bank Ltd. published today showed new business in the building industry fell in July at a record pace. Ireland's unemployment rate rose to a 10-year high last month and the economy may grow the least in a quarter century, according to government forecasts.
''Confidence in the construction industry had held up well but plummeted in recent months with respondents citing the credit squeeze and the worsening domestic economy,'' said Pat McArdle, chief economist at Ulster Bank. ''The fact that new business also recorded a record low means that further falls in activity and employment are likely.'' (Bloomberg)
- Fergal O'Brien
