House prices fall to lowest level in more than two years
Wednesday July 09 2008
ASKING prices for homes have hit their lowest level in over two years -- with the average house price down to €324,000.
Prices have been falling by an average of 7.9pc in just 12 months.
However some counties have been particularly hard hit because of a lethal combination of falling consumer confidence, rising interest rates, rising unemployment and an oversupply of properties.
The latest report from property website daft.ie shows the average house price is now down to €324,000.
However the stock of available properties has risen to an all-time high of 70,000 -- double what was available just 18 months ago.
The most severely affected counties are Monaghan and Sligo, with drops in asking prices of 11.8pc and 12.8pc respectively, while prices in Offaly, Louth and Cavan have fallen by just under 10pc.
"In many areas we are seeing severe downward pressure on prices due to a surplus of housing stock for sale," said Ronan Lyons, economist with Daft.ie.
"As long as house sellers find themselves in such a crowded marketplace there will be continued pressure to reduce prices in order to attract buyers' attention."
The report also highlighted how many house sellers are refusing to accept that the market has slumped and have totally unrealistic price expectations, listing their properties at higher prices than those already on the market.
This trend is most pronounced in south Co Dublin, where newly listed properties come on the market on average €60,000 higher than those already for sale in the area. Prices in the area are continuing to fall and now stand at €100,000 below their October peak of €706,000.
Fergal O'Brien, senior economist with IBEC, said the most striking thing was the sharp reduction in activity in the market. Houses on the market aren't selling, and fewer properties are being built.
However, he pointed out that the price drops vary wildly across the country.
"Prices declined in every county over the past year with the sharpest falls recorded in Dublin, the commuter counties of Leinster and parts of Connacht/Ulster," he said.
"Asking prices have held up much better in Munster. In Limerick, for example, prices have only fallen 1.6pc in the past 12 months and actually increased marginally in the most recent quarter. "
Mr O'Brien sees commuting distance as a key factor affecting house prices in the future.
"With oil prices close to $150 a barrel and pump prices in Ireland hitting record highs, I suspect that many prospective and current property owners are reassessing the costs and benefits of long-term commuting," he said.
Counties to have been particularly badly hit are those which have benefited in recent years from "excessive tax reliefs".
The most extreme example of this can be seen in Longford, where the number of new house registrations totalled just five units in the first five months of 2008 compared to 650 units in the corresponding period in 2006.
- Edel Kennedy
