Saturday 18 January 2020

House prices drop over a year for the first time since crash

Cost of three-bed semi-detached has fallen 0.6pc over 12 months

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Mark Keenan

Mark Keenan

The price of an average house has fallen nationally over a year for the first time since the economic recovery kicked in, the Q4 Irish Independent/REA Average House Price Index has found.

The average nationwide price of a three-bedroom semi-detached house, Ireland's most typical home type, has fallen in value by 0.6pc over the past year. This follows a 4.6pc annual rise in values in 2018.

The average family home nationally now costs €234,704 - a slight drop of 0.1pc on the Q3 figure of €235,009.

However, declines across the country in Q4 have been far lower than the preceding quarter (-0.4pc), indicating that some confidence returned to the market in the final 13 weeks of the year, in particular with the prospect of a resolution to long-running Brexit uncertainty.

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"We have seen a more stable quarter, with less negativity and 15 counties recording no movement in price. However, it has not been enough to keep the overall index in the positive against last year's figures," said REA spokesperson Barry McDonald.

The Q4 data also showed other problems emerging with myriad delays being experienced in selling houses and closing the deals.

"It is now taking 10 weeks to reach sale agreed in Dublin city and county compared to eight weeks a year ago, and these increases are reflected in commuter areas and our other major cities," said Mr McDonald.

The quarterly Irish Independent/REA Average House Price report looks at the sale prices achieved for Ireland's typical stock home, the three-bed semi, giving an up-to-date picture of the second-hand property market in towns and cities countrywide to the close of last week.

Three-bed semi-detached houses in Dublin city registered a fourth consecutive quarter fall (-0.6pc) since the end of September with the result that prices decreased by 4.3pc compared to December 2018.

The price of the average three-bed semi-detached house in the capital's postcode districts now stands at €425,833 - down €20,000 from €445,167 a year ago. This certainly reflects issues with affordability alongside the Central Bank's lending restrictions which have had a cooling affect in areas where prices are keeping average earners out.

"Although the Q3 prices falls that marked much Brexit indecision have eased slightly, we still saw the average house in south Co Dublin fall by €2,700 (-0.7pc) in the past three months - compared to €7,000 in the previous quarter," said Mr McDonald.

The data shows a significant increase in the supply of new and second-hand housing in north Co Dublin where prices have dropped by €5,000 on average in urban towns such as Swords, Skerries and Balbriggan.

Despite the 1.6pc Q4 fall to an average of €315,000, the north county area has fared better than any other Dublin market with an annual fall of 2.3pc compared to a south county drop of 5.1pc in 2019.

There has been increased choice for buyers, even in the €200,000 to €300,000 band where properties are still continuing to sell, but at a slower rate.

Meanwhile, agents have noted the condition of properties for sale has increasingly become a crucial factor in causing value loss due to the increasing cost of renovations.

"A trading-up market is also starting to appear in north Dublin, with people selling two and three-bed semis that they bought at the beginning of the recovery, seven years ago," said Mr McDonald.

City centre agency REA Grimes reports that the first-time buyer market is active, but that regular investors have moved out of acquisitions in the city centre market.

This mirrors a nationwide trend emerging of an increase in the numbers of small landlords putting their properties on the market and getting out of the rental game altogether. In contrast, reports through the year have highlighted the increasing participation of big funds in hoovering up new homes in large numbers.

The price of an average semi-detached fell by 0.05pc in the commuter counties in the past three months, with the average house in these locations now selling for €246,500 - an annual fall of 1pc.

Prices in the country's major regional cities outside Dublin - Cork, Galway, Waterford - remained largely unchanged, with an overall rise of 0.5pc attributable to a €5,000 per home Q4 increase in Limerick due to a lack of supply.

Galway city's average semi-detached price is €282,500, which remains unchanged on a year ago. Agents find themselves increasingly asking for price moderation from vendors with overpriced properties sitting on the market for longer, according to local agents McGreal Burke.

Elsewhere, Waterford City (€215,000) is up 2.4pc on the year, and Cork City is up 0.8pc annually to €317,500, with the market generally sluggish due to Brexit uncertainty and Central Bank lending restrictions at a relatively high purchase level.

The highest annual price increases (2.8pc) were once again seen in country towns, which saw selling prices rise by an average of almost €5,000 in the past year and 0.3pc in the past three months to €162,207. Other recently published data shows populations of middle-sized towns are on the increase.

Ireland's highest percentage annual rise came in Longford, where prices grew 16.2pc over the year to €122,000, an increase of €2,000 (1.7pc) on the September level, with properties taking just five weeks to sell.

The highest quarterly rise came in Sligo (3.8pc) where, with market values at €137,000 still ranging way below construction costs, demand has been strong for available stock and prices have increased by 11.3pc annually as a result.

In locations where building remains uneconomical, increased competition is forming as buyers with access to finance battle over a restricted supply of family homes in certain locations.

This is evident in Tralee, where agents REA Norths report that average three-bed prices increased by €10,000 (5.88pc) in the final quarter of the year, due to an increase in available mortgage finance running up against a lack of suitable housing.

Irish Independent

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