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Home market to stabilise at 2003 rates say experts

House prices are expected to stabilise this year, returning to levels last seen in 2003.

Prices dropped by more than 20pc nationwide last year, according to estate agent Sherry FitzGerald, although the rate of decline is slowing down.

The group said that the first indications that the market is moving toward a more stable period are beginning to emerge.

The average price of a second-hand property in Dublin fell by 4pc in the final quarter, bringing the total drop in capital to 21.5pc during 2009.

Peaked

Nationally, the average price of a second-hand house also fell by 4pc in the final quarter, the company said, bringing the total drop in prices to 20.3pc.

In Cork, prices fell by 3.9pc in the final quarter of 2009, bringing the results for the year to --20.2pc.

Since the housing market peaked in 2006, Dublin house prices have fallen in real terms by 45.7pc, while the national market has corrected by 40.2pc, according to the latest figures.

"This, in effect, means that prices in Dublin are back at levels achieved in quarter three of 2003, while prices nationwide are back where they were in quarter two of 2003," said a company spokesperson.

Sherry FitzGerald pointed out that first-time buyers bought 55pc of the properties traded compared with only 38pc during the same period in 2008, with 93pc of the homes transacted in the market purchased by owner-occupiers.

Marian Finnegan, the chief economist with Sherry Fitzgerald, said that the pace of price-correction had moderated notably from the beginning of last year.

In the first quarter, house prices in Dublin and Ireland fell by 9.5pc and 8.3pc respectively. This compared with a price deflation of 4pc in both regions during the final quarter.

Challenges

"Transaction levels in the market were stronger than anticipated during the summer months, a trend which continued right through the autumn," she said.

"This was particularly evident in the Dublin market.

"There is no doubt that the opening months of 2010 will bring its own challenges, particularly as consumers digest the implications of the Budget.

"However, the first indications that the market is moving toward a more stable period are emerging."


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