Surprise rise in house prices 'sign of capital bottoming out'
Published 23/06/2011 | 05:00
HOUSE prices increased in Dublin last month for the first time in three years, shock new official figures show.
It was the first sign of life in a housing market which has experienced one of the worst property collapses in the Western world.
Prices in the capital were up marginally -- the first increase since April 2008, according to figures from the Central Statistics Office (CSO).
Statisticians warned that the Dublin price pick-up could not be taken as a trend, but economists said prices in the capital could be close to bottoming out.
The rise was evidence of a two-speed housing market emerging, with Dublin likely to recover well ahead of the rest of the country.
While house prices rose in the capital, apartment prices continued to decline. When the two types of property were looked at, the rise in May was 0.4pc, the CSO said.
Residential property prices have fallen much more sharply in the capital than the rest of the country, while there are fewer vacant properties.
Across the country, prices fell 1.2pc in May, and were down 12.2pc in the past 12 months.
Average house prices nationwide were about €178,000, down €133,000 from the peak, Dermot O'Leary of Goodbody Stockbrokers said.
In Dublin, prices have collapsed by €200,000 on average, with the typical house now costing about €227,000.
From the peak, prices are down 41pc across the State, a decline that has prompted economists to predict further falls.
Dublin prices were down 46pc from their peak in early 2007, and could be close to the bottom, experts said.
NCB Stockbrokers economist Brian Devine said it was the first time Dublin property prices had risen since April 2008.
Economists said much of the adjustment in prices had taken place in the capital, but warned prices could still fall further.
KBC Bank's Austin Hughes said the new figures were "tentative evidence of a bottoming out in Dublin house prices that contrasts with greater weakness in the property market outside the capital".
He stressed it may be premature to talk of a turnaround in the Dublin property market, but that prices in the capital had fallen more than elsewhere.
Greater employment opportunities around the capital would support an earlier turnaround than in other areas, Mr Hughes added.
And the oversupply of much-demanded three-bedroom, semi-detached houses was less pronounced in Dublin.
He said "the improvement in Dublin house prices in May could be consistent with expectations of a protracted and uneven bottoming-out process in the Irish property market".
Apartment prices in Dublin have fallen almost 53pc from their peak in February 2007. Outside of Dublin, the decline from the peak is 38pc.
However, an estate agent has warned that house prices in the capital have fallen more sharply than indicated in the CSO survey.
However, the fall depends on the location of the property with some homes holding their value surprisingly well.
According to Sherry FitzGerald, national prices have fallen by 54.1pc from the market peak four years ago.
And it believes Dublin house prices have fallen by as much as 59pc.
However, some areas of the city have fallen by even more, with a 74pc drop recorded in apartments in Clontarf.
A spokesman for the estate agent said a two-bedroom apartment in Clontarf recently sold for €131,000, a 74pc drop on what the same unit sold for in 2006.