Property market boost as asking prices start to rise
Published 02/04/2012 | 05:00
THE housing market is finally beginning to move again -- with properties selling faster and increased asking prices in some parts of the country.
New figures reveal a rise in the prices being asked for properties in several regions, including Dublin and Galway.
Properties are selling more quickly, while the number of houses waiting to be sold has fallen to its lowest level in four years.
These trends are tentative indicators that the housing market is nearing the bottom of its long downward spiral.
As the country enters the fifth year of property price falls, a new Daft.ie report out today offers reason for a little optimism.
It recorded the smallest quarterly decline in prices for that period. The report also shows that selling conditions are improving in some areas, with 40pc of properties in the capital now being sold within three months.
However, the total number of properties for sale, at 54,000, is the lowest it has been for four years. While that is viewed as a positive as it means houses are not languishing on the market, the lower number for sale is also the sign of a severely "depressed" market.
And because the survey focuses on asking prices only, it is likely that many houses are being sold for far less than the figures quoted.
Daft.ie's Ronan Lyons said the latest figures suggested more stable asking prices and faster sales. "The question is whether it's sustainable," the Oxford university-based economist said.
"My own sense would be that we would want to see at least two quarters of stable or increasing asking prices before we could make any call about what's happening or that a bottoming out has occurred."
The report suggests there are positive signals, with 40pc of houses in Dublin and 36pc of houses in Leinster now finding a buyer within four months.
There has also been a boost in the speed of property sales in Connacht and Ulster, although Munster stayed constant at 29pc selling within four months.
Despite the signs of increased movement, Daft warns there won't be any real breakthrough until the banks start lending again. And even then, it will take a long time for confidence and activity to grow to a level where the housing market can be considered healthy.
The survey is also limited by its use of asking prices and not actual sale prices.
But several factors are now at play which at least offer a glimmer of hope that the housing market freefall will end later this year.
Over the entire mortgage market last year, just €2.5bn was loaned out. Experts now expect that to double to at least €5bn this year.
First-time buyers are also being encouraged to buy now by the Government, with a 25pc rate of mortgage interest relief offered -- but only until the end of 2012.
And six banks are moving to offer new types of mortgages offering help to those who bought during the boom but were caught in the negative equity trap.
These homeowners, who owe more on their mortgage than their house is worth, will be able to carry some of their debt with them. This will free them up to move to another house, and could provide some much-needed activity in the sector.
"We will work with the Financial Regulator to encourage banks to offer negative equity mortgages; we will finalise and enact a Personal Insolvency Bill designed to re-balance the rights of the borrower and lender in a fairer way," he said.
Mr Lyons said the fact that prices had gone up a little may reflect that "there are buyers out there and they are finally making a move".
"There are two ways of looking at this. The optimistic way is that a lot of parts of the country have seen falls from the peak of close to 60pc. And if you look at house prices relative to income or rent, a 60pc drop looks in line with what you might regard as long-term fundamental house prices.
"The more cautious view is that there might be a jump-up in asking prices following a big fall and it's really just the market taking a breather.
The real prices of all houses sold over the past two years will only be revealed in the summer as a new house price database goes online with Government backing. It is the first time that accurate information on the selling prices of houses will be available to the public.
Daft.ie said that the average asking price for the first quarter of 2012 was €177,000 -- down 52pc on the peak of €366,000 in mid 2007.
Nationally prices are still falling, but from January to the end of March fell just 1.4pc -- the smallest quarterly fall since the housing collapse began.
This figure is in stark contrast to the 8pc drop during the final three months of 2011.