ANY recovery in the residential housing market is likely to be evident in the Dublin area before anywhere else, according to one prominent economist.
Dermot O’Leary – chief economist with Goodbody Stockbrokers – made the assertion in response to a new report by property website, Daft.ie, which said that house prices dropped by nearly 6% in the second quarter of this year, meaning that by the halfway point of the year, prices were 19% lower than at the same point in 2008.
“While all geographical areas of Ireland’s housing market have suffered in the past two to three years, there is clear evidence that a regional divergence in performances is emerging.
“We have been pushing this “two-speed” housing market argument for some time, with the belief predicated on the fact that oversupply issues remain most acute in rural areas of the country,” said Mr O’Leary.
“The latest report from Daft.ie backs up this assertion; stock levels in Dublin in particular have started to retreat, partly due to the more aggressive price-cutting that has been seen. What does the data tell us? Across the country, asking prices have fallen by 25% from their mid-2007 peak, but within Dublin, prices have fallen by a more aggressive 27%.”
The Daft.ie report said that Dublin city centre was worst hit for falling prices in the second quarter of the year, with prices falling by 11%.
“There is some evidence that properties are starting to shift quicker, but this is more prevalent in the urban areas. A large determinant of prices going forward will be the trends in available supply. On this front, the number of houses for sale in Leinster is equivalent to 0.7% of the population, relative to 1.7% in Munster and 2.3% in Connacht/Ulster.
“Within this, the stock for sale in Dublin is equivalent to only 0.5% of the population. With population and jobs growth also likely to return to urban areas first, these supply and demand dynamics will dictate that any housing market recovery will make an appearance in the capital first,” Mr O’Leary added.
© Irish Examiner Ltd. All rights reserved