One-third of all house purchases 'are carried out in cash'
ONE-third of house buyers are now paying cash, an estate agency claimed yesterday.
Douglas Newman Good (DNG) said the value of a home in Dublin had fallen by almost two-thirds since the peak and a fifth last year alone.
The agency maintains that prices are now over-correcting and the trend may worsen this year as would-be buyers struggle to access mortgages.
But DNG chief executive Keith Lowe said 2012 would be the turning point for the crippled property market.
"While there may be some further over-correction this year, we believe that 2012 will be seen as a turning point in the market cycle," he said.
Property prices have crashed by 65pc since the height of the boom in 2006, according to DNG.
This followed a 20pc fall last year, with house prices in the capital now near the bottom, the agency said.
These are heavier falls than recorded by the Central Statistics Office, which said prices were down 46pc from the peak. However, the CSO figures exclude properties bought for cash.
Other housing market reports have put the average house price fall nationwide since the height of the boom at 50pc. Daft.ie said asking prices were down 18pc in 2011, compared with a fall of 13pc recorded by MyHome.ie.
Mr Lowe of DNG said access to mortgage finance continued to be an issue. This was one of the main reasons why one in every three buyers was now a cash buyer.
Most of those buying properties for cash are investors who made money during the boom and held on to it.
Some sold their home at the top of the market and have since been renting. Others are from rural areas and have sold land for roads or developments.
He claimed reforms in the Budget, including attractive capital gains tax and increased mortgage interest relief, were already helping the market.
"We have also noticed towards the end of 2011 a heightened demand and increase in transaction levels for large residential portfolios from cash-rich Irish and foreign investors," he said.
"This is now likely to escalate this year as investors take advantage of low prices, lack of liquidity and the new capital gains tax exemption measure."
Investors who buy a property and hold it for at least a year will not have to pay capital gains tax, Finance Minister Michael Noonan announced last month.
In a separate report, auctioneers Allsop Space claimed almost €39m in cash was used by buyers in a series of special property auctions last year.