House prices falling by €2,500 a month

HOUSE prices are falling by almost €2,500 a month — with further bad news on the way for home owners.

The latest price drop comes as mortgage lending slumped to a 16-year low and analysts warned homeowners to give up hope of a European Central bank (ECB) rate cut this year.

Soaring oil prices have also led the Irish Small & Medium Enterprises Association (ISME) to warn of the threat of job losses and company closures.

The latest edition of the permanent tsb/Economic and Social Research Institute index shows more than €28,000 has been slashed off the value of the average house in the year to the end of April, as prices dropped by 9.2% — the highest ever annual fall.

House prices fell 1.1% in April alone, bringing the drop for this year to 3.3%.

The average price paid for a house nationally in April was €278,521, compared to €306,619 in the same month last year.

Further price drops are likely with Bank of Ireland forecasting house prices will fall 5% this year and house completions will drop 36%.

The bank does, however, say affordability will improve because incomes are expected to rise by 4.9% this year.

“The Government has also cut the effective rate of stamp duty and provided a substantial fiscal incentive to first-time buyers, which should help, as does the fall in supply,” said Bank of Ireland’s chief economist, Dr Dan McLaughlin.

However the Central Bank said yesterday home loans increased 11.4% from a year earlier, the least since 1992, confirming that rising borrowing costs and sliding property prices are deterring prospective homebuyers. Overall lending rose 15.9% in April, compared with 17.1% the previous month.

Many economists are forecasting no cut in interest rates this year — saying it will be early next year at the earliest.

These dismal figures come as the price of oil continues to creep higher.

ISME said it receives several calls a day from businesses outlining their concerns and indicating that if the present situation continues they will have no option but to let people go.


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