Anyone who cracked open the champagne last month after hearing that house prices had increased for the first time in five years must be decidedly sober by now.
Irish house prices are on the slide again, according to figures published by the Central Statistics Office (CSO) last Tuesday. Even in Dublin, where prices were thought to be recovering, house prices fell by 1 per cent last month -- that price drop almost wipes out the gains made in Dublin between March and May.
Conall Mac Coille, chief economist with Davy, described the recent speculation of a turn in the housing market as "premature". "Weak bank lending, labour market conditions and excess supply in the market will push prices down further," said MacCoille.
But was the speculation premature? The CSO figures don't record cash transactions, yet some estate agents say cash buyers make up at least 40 per cent of all house buys.
Some property experts also believe that the market in some parts of the country is in the early stages of recovery -- particularly in Dublin.
"It is very difficult to predict the bottom of the market. You only really know you've hit the bottom when you've come out the other side," said Tom Dunne, head of the School of Real Estate and Construction Economics in the Dublin Institute of Technology.
"However, on the assumption that we are not going into any rapid economic crisis, it's not unreasonable to suggest that the market is somewhere around the bottom and about to turn. The property market is not the one market though -- the market in Dublin behaves differently to that of Leitrim and Mayo."
Dunne believes there are signs that the Dublin market is returning to "some kind of normality".
"People are beginning to buy property in Dublin," said Dunne. "There's a relative shortage of family homes in Dublin along transportation routes. It also looks like rental values in Dublin -- that is, rent as a percentage of the property value -- are coming into long-term norms."
In the first six months of this year, house prices in Dublin were stable -- particularly for family homes, according to Kieran Harte, marketing director of the property website, Daft. "We are seeing record low properties for sale in Dublin, which suggests there's a lot less stock on the market," said Harte. "Family homes in south Dublin city are getting hard to pick up."
In the property market, as in any other market, shortage of supply usually pushes up prices.
Douglas Newman Good (DNG) recently put a property on Whitethorn Road in Clonskeagh up for sale. On the first viewing of this property, 150 people turned up in an hour, according to DNG boss, Keith Lowe. "This was one of the biggest numbers that have ever attended a DNG viewing, even in the boom times," said Lowe. "We already have bids in over the asking price."
Lowe believes that house prices in Dublin have over-corrected -- that is, fallen below what the property is actually worth.
Although, Lowe, like any estate agent, has an interest in talking up the property market, there does seem to be more activity in Dublin.
"Anecdotally, there appears to be more 'sale agreed' signs going up in Dublin housing estates," said Alan McQuaid, economist with Merrion Stockbrokers.
Independent Mortgage Advisers Federation spokesman Michael Dowling believes the Dublin market has bottomed out in "some locations", including Dublin 6, Blackrock, Dalkey, Howth, Sutton and Clontarf. "At the top end of these markets, I don't think there will be much more movement downward," said Dowling.
Apartment prices in and outside Dublin will continue to take a battering for some time, however. "There is no interest in apartments," said Dowling.
CORK AND GALWAY
Outside of Dublin, the first places likely to see any uplift in property prices are the cities of Cork and Galway, according to Harte.
"Rents for family houses are rising in Dublin, Cork and Galway, which suggests there is greater demand for those houses," said Harte. "People are very much prepared to buy there. It's more the unavailability of mortgages that is holding things up."
DNG's Lowe said that while prices in the main urban areas outside Dublin are not rising, sales are improving.
MIDLANDS AND ATLANTIC COAST
In contrast, the huge oversupply of properties in the Midlands and along the coast is likely to drag prices down there for some time.
As reported by this paper earlier this summer, it could take up to 43 years to fill all the empty houses in this country. There are almost 300,000 houses lying empty across Ireland and most of these properties are around the Atlantic coast -- in Kerry and Donegal in particular.
"Anything in the Midlands is dropping quite significantly," said Harte. "That includes Roscommon, Laois, Offaly and Longford. Prices are also falling in Mayo and outside of Galway city. The asking prices in traditional holiday home areas around the coast, such as Sligo, Kerry and Cork, dropped in the first six months of the year."
The banks' reluctance to lend money for investment properties is also pushing down prices in traditional holiday home areas.
"Banks are not lending for holiday homes, so funding these purchases is very difficult," said Dowling.
If you are considering buying a holiday home, it's worth checking the Department of Environment and Local Government's latest National Housing Development survey. If there is an oversupply of empty houses in your desired county, you could be best to sit tight for a while, as the chances are the price of that property will fall further.
Empty houses make up more of the housing stock in Leitrim and Longford than they do in any other country, according to the department's latest survey. Cavan, Sligo, Roscommon, Laois and Cork County also fare badly.
People are still struggling to get mortgage and, unless this changes, the property market is unlikely to ever recover.
"The property market depends on finance and although the banks say there is money available, they are imposing rigours on borrowers that they didn't in the past," said Dunne. "As long as finance is difficult, the market will be troubled. Yes, there are cash buyers out there -- there always was. But in the past, there were far more people who would go to a bank to borrow money to buy a home than to buy one with cash."
Unemployment is also weighing on the market.
"On a practical level, it is difficult to see people rushing out to buy a house when labour market conditions remain very fragile," said McQuaid. "All in all, we don't see a major improvement in the housing market until there is clear evidence that the jobless rate has peaked and is on a downward trend."
Even if the property market is in the early stages of recovery, any uplift could be shortlived once the property tax comes on board, warns Joe Durkan, economist with the Economic and Social Research Institute.
It now looks like householders, particularly those living in Dublin, face an annual property tax of €1,000 or more once the tax replaces the current €100 household charge.
The property tax has to be high if it is to cut Ireland's deficit," said Durkan. "So even if you get a bottom in the property market over the next few months, there could be more prices falls later, once the property tax comes in."