Ireland leads world in house prices fall

HOUSE prices fell in Ireland by more than anywhere else in the world last year.

Experts are now calling for a proper index of prices in Ireland, saying that without it we will never know when the market has hit bottom.

The Knight Frank house price index found that house prices fell here by 10.8% last year while they rose by 20.1% in Hong Kong, which was top of the list.

Globally house prices rose by 2.8% last year, led by Asia-Pacific (7.5%), the Middle East (5.3%) and South America (3.8%).

The weakest region was North America which saw no change in values in the previous 12-month period.

Besides Hong Kong the fastest risers were Latvia (16.9%), which is bouncing back from a 70% fall in prices during the credit crunch, and Israel (16.2%), which is still benefiting from considerable inward investment.

Head of research at Knight Frank, Liam Bailey, said: “Our main headline confirms relatively benign conditions — with average annual price growth across the world at a modest 2.8%.

“Of course this headline hides big regional and country level differences, but more concerning is the fact that this annual figure hides the fact that a growing number of countries are seeing negative quarterly price movements.

“Across an increasing number of European countries and also in the US, markets were weaker in the second half of 2010, following a brief revival in the previous 12 months.”

The index said that it looks increasingly likely that Asian markets will escape a crash in prices.

“Across Europe and the US the lack of bank lending is likely to extend the recent period of price reversals,” said Mr Bailey.

Director of the Irish Mortgage Corporation, Frank Conway, said that it looks Ireland will become the “laggards of Europe” in terms of price recovery.

“Even states such as Spain show some signs of stability, which is a concern for Ireland since both states suffered severe property price crashes and increases in the unemployment rates.

“In fact, on some levels, the Spanish employment situation is considerable worse than Ireland’s,” he said.

Mr Conway said Ireland’s disadvantage is the “fuzzy nature” of recording of property price data.

“What we really need is a central, Government controlled database, where all transactions are recorded and published shortly after the completion of each month.”