Price of houses in freefall as lending cut
THE fall in property prices shows no sign of bottoming out, economists said yesterday, after new figures showed prices falling at a faster pace.
Property prices fell 2.2pc last month and have now halved from the peak almost five years ago, according to the Central Statistics Office (CSO). The average house is now changing hands for around €160,000. In the last 12 months prices were down 18pc.
And separate figures out yesterday show the amount of money borrowed for new mortgages has now declined for the eighth quarter in a row.
The lack of lending is seen as one of the main reasons property prices keep falling sharply.
Dublin prices are dropping at a much sharper pace than the rest of the country.
Apartment prices in the capital collapsed by 6.3pc in February, and are now down 23pc over the last year.
Rough calculations based on the CSO figures indicate that Dublin properties, having declined by 57pc from the peak of the market, are now selling for €185,000 on average. This is down from a peak price of €431,000.
Outside Dublin, the average price of a property is €147,000, down from €268,000. This is a decline of 45pc, and compares with a decrease of 49pc for the country as a whole.
The latest property figures were issued just after the Central Bank warned that the rapid fall in property prices was prompting fears that further falls in the value of homes could trigger greater loan losses at the bailed-out banks.
Bloxham Stockbrokers economist Alan McQuaid said he saw no signs that prices would not keep falling, with a fall of a further 10pc predicted for this year.
Lending by banks would have to get back to normal and unemployment fall before the drop in property prices abated, he said.
Cathal Mac Coille of Davy Stockbrokers said he expected prices to eventually fall by 65pc to 70pc from their peak levels.
Meanwhile, the amount of money borrowed for buying houses has fallen for the eighth consecutive quarter in a row, Central Bank figures show.
The total amount of mortgages outstanding is now €80.4bn. This was a fall of 2.4pc from 2010, as more older loans came to their natural end and were replaced by fewer new ones.
The total amount of money owed in loans by private households at the end of December 2011 stands at €150bn.
Households had €86.2bn on deposit in banks at the end of December 2011.