Fear factor now hitting house prices nationwide
Brexit concern sparks significant value declines
House prices have fallen nationwide, in some areas significantly, over the first six months of the year, according to a report published exclusively in the Sunday Independent today.
The decreases in achieved prices are particularly pronounced in Dublin, with declines of up to 12.5pc in the Dublin 4 area. The decreases are evident in other cities and larger towns around the country as well as in commuter belt areas, the new figures reveal.
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Property experts say a fall in market confidence among house buyers is behind the drops, although an increase in the number of new homes coming on the market is also dampening demand.
The fall in confidence is being put down to uncertainty around the Brexit process, which the Central Bank of Ireland recently warned could affect house prices.
"The uncertainty of Brexit is having an impact on people's behaviour," according to the Institute of Professional Auctioneers and Valuers, which compiled the data.
In February last year, the IPAV barometer correctly identified the first slowdown in the rate of house price increases. By September, it had picked up on the first price drops in Dublin. It now shows that the fall in actual prices achieved has spread beyond the capital and commuter counties.
The national average price for a property now stands at €263,606, a 2.5pc drop since late 2018. However, this figure masks a number of larger city price falls as values in some rural areas continue to rise.
The figures confirm the downward trend in Dublin, where prices have fallen by up to 12.5pc, with prestige homes in Dublin 4 hit most.
Price drops have spread beyond the capital to the greater Dublin area, commuter counties and regional cities, according to the Residential Property Price Barometer.
The market for four-bed semis around the country has been worst hit, with prices in this category falling all over the country. In Roscommon, the decline was 7.8pc, while in Dublin, all property types - two-bed apartments, three- and four-bed semis - have seen prices fall.
In contrast, the apartment market showed double-digit increases in some areas outside the capital, but drops in many city postcodes and the popular commuter counties of Wicklow and Kildare.
Pat Davitt, chief executive of IPAV (the Institute of Professional Auctioneers and Valuers), which compiles the twice yearly report, confirmed: "There's a slowdown in property right across the country and some parts of Dublin are still being hit worse than others."
In July, the Central Bank warned that a hard Brexit could affect house prices.
According to Davitt: "The uncertainty of Brexit is having an impact on people's behaviour - whether to buy a property or not, and the timing of buying, even the timing of selling. Those prices are falling because of confidence, that's all. It's not that people can't afford to pay their mortgages, or people can't afford the property."
The Residential Property Price Barometer is compiled by IPAV from actual sales achieved nationwide by its members for the average price across the three most popular types of property over a period of six months.
The figures contrast with the most recent CSO data for June, which show that house price inflation slowed to 2pc, its lowest level since 2013 when residential property prices hit a trough. CSO figures also showed that Dublin prices had flat-lined.
Davitt points out vendors need to realise that they may have to make price adjustments to sell - the average time to sell, according to figures published earlier this year by estate agents REA, is now nine weeks in the country and eight weeks for a Dublin property, twice that of a year ago.
However, director of research at Savills, John McCartney, believes the recent slowdown and price drops are due to the number of new homes dampening down demand. "We've ramped up production pretty rapidly in recent years," said McCartney, "and demand has been estimated with a wide margin of error". Supply is simply catching up with demand, he said.
It is estimated that approximately 21,000 new homes will be built this year alone. "There's not the level of urgency that there was in the market," he added. "That urgency that is created by rapidly rising prices and the expectation of further rising prices, has just naturally disappeared."