House prices down 55%

HOUSE prices have now plunged more than 55% from their peak, falling back to levels last seen at the start of 2002.

The Cork market saw prices fall by just over 13% in the 12 months to June this year, while the price drop in Dublin was almost 16%, according to Sherry FitzGerald estate agents.

On a national basis, the average price of a second-hand house in Ireland fell 5.1% in the second quarter of this year, a 15.3% drop in the 12 months to the end of June.

From the peak of the market in 2006, Dublin house prices have fallen in real terms by 60.2%, the national market has corrected by 55.2% and in Cork, prices have dropped almost 50% from their peak.

This, in effect, means prices in Dublin and Ireland are back at levels achieved in the first quarter of 2002.

Sherry FitzGerald chief economist Marian Finnegan said the falls place the Irish property recession as one of the most significant recessions in the post-war era.

“Accelerating deflation at this point in the property market cycle is somewhat contradictory as the factors underpinning the market have strengthened with improved affordability and relatively tight supply, particularly for family homes in the urban centres.

“However, the appetite for the volume of transactions required to stabilise the market is hampered by low consumer sentiment and a dysfunctional mortgage market,” she said.

The figures show that 88% of the second-hand homes transacted in the market were purchased by owner occupiers. First-time buyers remain the most active sector in the market, accounting for almost one-third of the properties traded in the year to date.

An analysis of the profile of vendors who sold their property through Sherry FitzGerald in the year to date revealed that 29% of vendors were selling investment properties, the same proportion as in 2010. Around 15% of vendors sold with the intention of purchasing a larger property, compared to 19% during the same period in 2010.

Meanwhile, prime Dublin office rents have fallen 52% to €323 per sq metre from their 2007 peak, according to a bi-monthly report by real-estate broker CB Richard Ellis.