House prices down but market starts to stabilise

SECOND-HAND house prices in Dublin could stabilise by the end of the year with figures showing that properties in the capital have now lost almost half their value.

Second-hand houses in Cork have been hit just as hard, with prices down just over 13% in the last year, according to estate agents Sherry FitzGerald.

The average price of a second-hand property in Dublin fell 2.5% in the second quarter of this year, which is an improvement on the contraction of 3.1% in quarter one.

Estate agents say they are starting to see signs of life in the market with multiple bidding on some properties and others selling for their asking price.

Nationwide, the average price of a second-hand house in Ireland fell by 2.8% in the second quarter of this year, unchanged from the previous quarter. This brings the total drop in prices to 13.5% during the 12 months to June 2010.

From the peak of the market in 2006, Dublin second-hand house prices have fallen by 49%, while the national market has corrected by almost 43%, Sherry FitzGerald said. This, they said, means that prices in Dublin and Ireland are back at levels achieved in quarter four 2002.

First-time buyers bought just over half of the properties traded in the second quarter, slightly up on the same period last year.

Sherry FitzGerald chief economist Marian Finnegan said: “There is no doubt that the overall market remains challenging. That said, there are emerging signs of cautious confidence in the established housing market.”

Ms Finnegan said the Dublin market could bottom out before the end of this year, with this stability gradually spreading to other key regional centres.

“That said, there are obvious potential future risks to this associated with the performance of the economy, the interest rate cycle and liquidity restrictions in the financial markets,” she said.

The new homes market, however, remains rather challenging, with limited sales activity nationwide, she said.

Meanwhile, according to figures from propertyweek.ie the average asking price of three-bed semi-detached properties in Dublin fell by 1% last month to €338,500. Dropping by 2%, asking prices for two-bed apartments in Dublin fell to €271,600.

In Cork city asking prices for three-bed townhouses fell in June by 3% to €228,500 – well below the equivalent in Galway city. Apartment asking prices in Cork continued to perform somewhat better, with only a 0.8% fall after a slight increase in May.