House price rise sparks hope of market recovery
Published 26/06/2012 | 05:00
HOUSE prices rose in May as the property market nationally recorded its first rise in five years.
Prices in Dublin were up for the third month in a row, sparking hopes that the worst could be over for the housing market in the capital.
The news came as NAMA announced it would knock down the first of the properties it owns.
The numbers are expected to increase as debtors and receivers start to get to grips with particularly difficult sites, a spokesman said.
In total, there are 290,000 vacant homes in the State, but many of them are in rural coastal areas where people do not want to live.
The Economic and Social Research Institute (ESRI) said last week that thousands of under-35-year-olds were waiting to buy as soon as the economy recovers and property prices have stopped falling.
Economists cautioned that the new CSO figures showing price rises did not mean the property crash was at an end, but it could mean the worst was over.
The Central Statistics Office (CSO) said that the latest figures for May showed that house prices rose by 0.2pc -- the first rise since September 2007.
Prices have now halved since the peak of the boom with the average property now estimated to be valued at €157,600. This is an increase of around €250 since April.
Over the last year prices nationally are now down 15pc.
And Dublin prices rose by 0.2pc in May, with the capital recording three months of rises. Apartment prices were down in Dublin, but house prices were up.
The average Dublin property is now valued at around €187,000, calculations based on the CSO figures show.
Prices for houses outside of Dublin also rose in May, but experts said that although values may be stabilising in the capital they expect more falls in other parts of the country.
Professor of Geography in NUI Maynooth, Rob Kitchin, said there was tentative evidence the property market was bottoming out.
"We are at the bottom and we are bumping along the bottom and hopefully things will begin to rise again very slowly," he said.
He said it appeared that property prices in Dublin were stabilising, but we would need at least six months of prices either remaining flat or rising before we can be sure we have hit the bottom of the market nationally.
But prices outside of Dublin would keep falling, because there were so many vacant properties.
Less than 5pc of houses were vacant in the capital but there was an oversupply of houses and apartments almost everywhere else.
Economist with Merrion Stockbrokers, Alan McQuaid, said there won't be any major improvement in property prices until the jobless rate falls.
Mr McQuaid said that recent research from the Central Bank and the ESRI showed that the housing market may be close to the bottom.
The ESRI found evidence of pent-up demand among the under-35s seeking to buy a family home. There will be a demand for between 15,000 and 20,000 houses a year for the next decade as younger people form more households, the think tank said.
However, a huge reluctance from bailed-out banks to fund mortgages was keeping the property market depressed.