Another big fall in house prices
Published 29/02/2012 | 05:00
THE property collapse has picked up pace, with the price of houses and apartments now falling at their fastest annual rate in two years.
And economists say that they expect the drop to continue this year.
House prices fell by 1.9pc in January, the fastest annual rate of decline since January 2010.
In the past 12 months prices fell by 17.4pc, the Central Statistics Office (CSO) said.
The value of apartments and houses is down 48pc from the peak in 2007.
This has left property prices back where they were in the middle of the 2000s, according to Goodbody Stockbrokers' Dermot O'Leary.
But the CSO house price index has been heavily criticised as it does not capture cash purchases, which are estimated to account for up to a quarter of property transactions.
Cash purchases are thought to be at even lower prices, which means that house price falls are probably greater than the CSO figures indicate.
Goodbody's Dermot O'Leary said there was evidence from transactions that a lot of purchases were being made at prices 60pc below peak levels.
"The official index continues to catch up on this," he said.
Houses were now affordable but the lack of mortgage credit meant prices would continue to fall, he added.
Dublin property lost 4pc of its value last month, and 21pc over the past 12 months.
But for the second month in a row, apartment prices rose in the capital, by 2.4pc in January.
Over the past 12 months Dublin apartment prices fell 18.4pc, and are down 59pc from the peak of the market in 2007.
The fall in residential property prices in the rest the country is lower, at 43pc.
The figures mean that the average house price nationally is now €163,000, compared with €314,000 at the top of the boom.
The average Dublin property has shrunk from €431,000 to around €187,000. Outside Dublin, the average property is now priced at €152,000, down from €268,000.
Meanwhile, a study by the Economic and Social Research Institute's Dr David Duffy has found that forcing house buyers to come up with larger deposits would mean property prices swings would be less severe.
He recommended the model used in Hong Kong where deposits of 30pc of the property's value are demanded by banks, reducing the risk of buyers overstretching themselves.
A Daft.ie survey yesterday found 65pc of people feel that property prices still do not represent good value, implying prices will fall further.
Bloxham Stockbroker's Alan McQuaid said a recent study of 325 cities found Irish property is now the second most affordable after the US.
"It now costs little more than three times the average salary to buy a house here as against 10 times at the height of the boom.
Despite the current affordability of Irish property, Mr McQuaid expects prices to fall by at least 10pc this year.