More house price falls before recovery comes
Expert warns of housing sector job losses but says market activity is picking up in capital, says Daniel McConnell
THERE will be further drops in house prices and job losses in the housing sector this year as the banks raise their lending interest rates as a result of the credit squeeze, leading industry figures have said.
It remains very much a buyers' market at present and while a recent report said on average house prices are down about 15 per cent on their peak in 2006, a Sunday Independent survey of price drops in the last week has shown some houses drop by over 30 per cent on their original asking price.
This means more bad news for existing home owners, who have seen their mortgages pushed up by successive interest rate hikes in the past two years, while seeing the value of their homes drop.
Speaking yesterday, Robert Ganly, President of the Irish Auctioneers and Valuers Association, said that there will be more job losses in the housing sector in the coming months as the credit squeeze continues, but said that activity is returning, particularly in Dublin.
He said: "There will be more job losses and some poorer quality builds will struggle to sell, as buyers are getting great value at the minute. However, there is a shortage of supply which will start impacting on prices shortly."
He reiterated his statement that it remains very much a buyers' market at present and agents are seeing a "flight to quality". Ganly also said that lower quality or more remote new houses will struggle to sell.
One of the key signs that the market has been sluggish has been the lack of auctions, and Ganly said the day of ordinary houses going to auction are over. He did say that more unique property auctions are beginning to return.
Last week saw the publication of the latest Myhome.ie /NCB Property report which said Irish house prices have fallen by 15 per cent since their peak in 2006. However, asking prices are continuing to fall more rapidly this year.
It said prices had fallen by 1.4 per cent in the first three months of the year compared to the final quarter of last year.
MyHome.ie said its research was further evidence that the residential housing market was now clearly a buyers' market. However, the survey, which is based on the values of homes sold on the property website, might be even more drastic than at first sight.
Anecdotal evidence from the website claims there has been a 15 per cent fall and possibly even more in some areas. Sellers of both new and second-hand homes have begun to adapt to the new realities of the market and are accepting lower prices, said Jim Miley, the MyHome.ie boss.
However, this may have its benefits, claimed Mr Miley, as the once-flourishing housing market corrects itself.
The continuing downward movement in prices, combined with the increasing willingness of sellers to accept lower than previously expected prices, will ultimately restore the supply-demand balance in the market, although it is likely to take some time yet to achieve that balance, he added.
The biggest asking price fall was seen in the price of a three-bedroomed semi in Dublin's commuter counties, which fell by 3.4 per cent in the first quarter, compared to the previous three months.
For example, according to IrishPropertyWatch.com, which monitors price movements on every house for sale in Ireland, during the seven-day period of April 6-13, there were 1,069 price drops and fewer than 70 price increases.
One such property, Cosmona, Loughrea, Co Galway, was first listed for €550,000 but is now down for sale at €300,000 while a house on Main Street in Glanworth, Co Cork, has dropped by €200,000 to €600,000.
Despite the continuing price drops, estate agents have had a much busier start to the year compared with 2007, but are saying that houses are still taking much longer to sell.
South Dublin-based estate agent Justin Kinsella, of Justin Kinsella & Associates estate agents, said he has had the busiest month in 18 in terms of viewing and Speaking to the Sunday Independent he said: "Certainly since the start
of the year, the first time buyers are out in force due to the rising cost of rents. But we are also seeing the impact of the stamp duty.
"But for me anyway, prices are down 15 per cent on the 2006 peaks, which is good news. There is great value in the market and there is a lot of stock there as well."
Kinsella did say that it is now taking a lot longer to close on property compared to boom time, with properties now taking between eight to 10 weeks to sell.
Kinsella's sentiments have been echoed by one of Dublin's leading and most established agents. Peter Wyse said: "The time to buy is now. There is certainly great value in the market at the minute but it doesn't mean people can dilly dally. I am busier now than I have been in a while but prices are still way down on where they were 12 months ago."
That picture is being replicated in smaller cities such as Cork and Galway. Austin Payne, of Smith Auctioneers in Galway, said activity is returning because sellers are now more realistic in what they expect to get for their houses.
Speaking to the Sunday Independent, Payne said: "Sellers are now much more realistic and are taking offers that a year ago they would have laughed at. We are back to early 2006 prices in Galway and certainly we are busier than we were before Christmas."