Average house prices to fall by 4% or €12,000

HOUSE prices are expected to fall by 4% this year, cutting €12,000 from average Irish property prices.

This is according to Goodbody Stockbrokers which said, based on indications of the market, it can be reasonably assumed that prices will continue to soften over the coming months.

These comments come in response to the latest TSB/ESRI house price index which show average house prices have dropped by 3% over the first seven months of this year.

The index also showed house prices in Dublin fell 1.9% in July from June and rose just 0.5% from a year earlier.

Goodbody chief economist, Dermot O’Leary said: “While this region was holding up relatively well in the opening months of 2007, average prices fell by 1.9% in Dublin in July alone.

“Prices are now roughly back to their summer 2006 levels.

“We are forecasting a 4% decline in average house prices for the full year. However, this rests on the assumption of a stabilisation in the final few months of the year. If anecdotal indications from the housing market are anything to go by, prices could be down by more by the end of the year,” he said.

The index also showed average national house prices declined by 0.4% in July compared to a decline of 0.5% in June.

Head of marketing at Permanent TSB Niall O’Grady said: “Although the experience varies from sector to sector, the overall picture is one of a housing market ‘marking time’ after a decade of phenomenal growth.”

A slowdown in home building and the outlook for interest rates “are likely to be critical in determining how the market behaves for the remainder of this year and into next,” Mr O’Grady said.

In the 12 months to the end of July 2007, house prices outside Dublin reduced by 1.8%.

The average price paid for a house in Dublin and outside Dublin in July this year was €411,069 and €257,372 respectively.

The equivalent prices in December last year were €427,343 and €266,339.

House prices in the commuter counties like Louth, Meath, Kildare and Wicklow declined by 0.3% in July this year, compared to a reduction of 0.7% in June.

During the first seven months of this year prices fell by 4.2%.

House prices in July for first-time and second-time buyers dropped by 0.4% and 0.7% respectively.

The average price paid by first-time buyers and second-time buyers in July 2007 was €268,904 and €337,875 respectively. The equivalent prices in December 2006 were €279,003 and €349,213.