Repossessions will drive down property prices, say experts
Published 15/03/2013 | 05:00
A HIKE in repossessions will drive down property prices further at a time when the market finally looked to be levelling off, a new report has concluded.
The housing market has stabilised to such an extent that prices are beginning to rise in Dublin, according to an analysis from NCB stockbrokers.
But there is a risk to the market from banks repossessing buy-to-let properties and releasing hundreds of them for sale.
The new report came as state property agency NAMA said it added a further 100 properties to its deferred payment initiative.
The scheme seeks to insure the buyer against a further drop in value of their new home of up to 20pc.
The properties – which range from two-bed apartments to five-bed houses – are located in Cork, Dublin, Limerick and Wicklow, and cost between €95,000 and €370,000.
NCB said steep falls in prices of recent years have begun to be arrested, referring to the latest Central Statistics Office information showing that prices had their slowest rate of decline since March 2008.
Excess supply in many areas, in particular the north and west, means that prices in these areas will keep falling.
But Dublin and its surrounding counties should continue to do much better because of a shortage of starter and family-type homes.
The key factor for the market is the expected move by banks to start repossessing homes of defaulting mortgage holders, particularly those with investor home loans.
Legislation is due to be in place by the end of the month to restore the right of lenders to repossess.
NCB analyst Philip O'Sullivan said: "A significant potential overhang for the housing market is the banks' approach to buy-to-let properties."
However, Mr O'Sullivan said there were also other positive indicators that may lift the housing market. These include a gradual recovery of the domestic economy, along with improved credit availability.
Property prices were also set to be buoyed by a shift in attitudes about home ownership.
"Bringing it all together we believe the outlook for the Irish housing market has certainly improved," said Mr O'Sullivan.
The latest figures from the Central Statistics Office show that prices jumped in Dublin in January to record their first annual rise in more than five years.