House prices plummet by up to 18pc with no rebound in sight
Published 03/01/2012 | 05:00
BUDGET measures introduced to boost the housing market will not work until banks start lending and consumer confidence returns, experts have warned.
Two reports on the state of the market published yesterday showed house prices fell between 13pc and 18pc nationally over 2011.
It has also been suggested that while private rental values will drop somewhat in 2012, they will be protected by rental subsidy which prevents them from falling further.
However, according to both MyHome.ie and Daft.ie, measures introduced in the recent Budget -- including an increase in mortgage interest relief for 2012 buyers -- will not be enough to breathe life into the sector.
"I don't think they will (work alone) because it's a small change, but the further issues of confidence and finance have not been fixed," said Ronan Lyons of Daft.ie.
"The market will not rebound because of this; people can't get mortgages and they are not confident where the prices will go."
The outlook for the rental market is not so clear, although it is believed that rental subsidy -- where the majority of tenants' rents are paid by the State -- will prevent any collapse in prices.
Mr Lyons said that, with the exception of Dublin three- and four-bedroom family homes, there will be a drop-off in rental values but this will be protected by rent subsidy.
Tenants will have no reason to renegotiate their price if it is simply covered by the allowance.
"We are seeing that once the rents fall to the maximum threshold (of the subsidy), they go no further," he said.
However, much of this is speculative, and the state of the rental market will be clearer by the end of the first quarter of 2012.
Angela Keegan, managing director of MyHome.ie, said: "Well over 100,000 properties are in receipt of rent subsidies. I think it plays its part but there are other factors that are in play, most definitely employment and that will impact the rental market."
But there is good news. MyHome says the final quarter of 2011 saw the lowest percentage drop in asking prices for sales (2.4pc) in two-and-a-half years.
Daft.ie, however, puts that figure at the higher rate of 7.7pc -- the average asking price for a residential property is now just over €175,000, 52pc lower than the 2007 peak.
In Dublin, half of properties sell within six months, while in Connaught and Ulster it takes a full year.