House prices down 20.3% in the year

INVESTORS have effectively exited the housing market – 93% of house purchased in 2009 were by owner occupiers – as house prices fell by 20.3% in the year and 40.2% from their 2006 peak.

The rate of house price decline moderated as the year progressed bringing total correction in the national market to 20.3% in the 12 months, according to Sherry FitzGerald, Ireland’s largest estate agents.

From the peak of the market in 2006 Dublin house prices have fallen in real terms by 45.7% while nationally they fell has been 40.2%.

An analysis by Sherry FitzGerald of the profile of vendors who bought and sold their property through the company in the year revealed that 25% of vendors were selling investment properties the same proportion as in 2008, while 93% of the homes sold were bought by owner occupiers.

First time buyers bought 55% of the properties traded in that period, compared to only 38% during the same period in 2008.

The Sherry FitzGerald index shows that the average price of a second-hand property in Dublin fell by 4% in the final quarter of the year, bringing the total drop in prices to 21.5% during 2009.

“The comparable figures for the national market saw that the average price of a second-hand house in Ireland also fell by 4% in the final quarter, bringing the total drop in prices to 20.3% during 2009. The Cork market saw prices falling by 3.9% in the final quarter, bringing the results for the year to minus 20.2%,” the report’s authors said.

The fall in house prices means that prices in Dublin are back at levels achieved in quarter three 2003, while prices nationwide are back where they were in quarter two of 2003.

Sherry FitzGerald Group chief economist Marian Finnegan said: “In quarter one, house prices in Dublin and Ireland fell by 9.5% and 8.3% respectively.

“This compares with price deflation of 4% in both regions during quarter four. Transaction levels in the market were stronger than anticipated during the summer months, a trend which continued right through the autumn.

“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,” she said.