House prices continue to fall

THE decline in the property market continued in September, with the latest figures showing another drop in average house values.

Developers desperate to sell new houses are now trying to hook buyers by providing incentives like property fit-outs and other “add-ons”, as the value of new homes fell by almost 2% in the space of nine months.

While the price slump is bad news for developers and auctioneers, it provides some relief for buyers who have been waiting to get onto the property ladder, or to progress to the next step.

National house prices were down by an average of 0.3% in the month of September, while prices are down by 3.6% since the beginning of the year.

According to the latest edition of the Permanent tsb/ESRI house price index, the 0.3% drop in September is the same as that recorded in August. The average price paid for a house in Ireland in September stood at €299,483, compared with €308,179 in the same month last year. Permanent tsb head of marketing Niall O’Grady described the trend as a “modest decline” in the overall property market but said the picture for September revealed “inconsistencies”.

“For example, there were modest increases in three-bedroom semi-detached properties and no change in the price of new homes. Anecdotally, there is some evidence that the prices of both are being supported by developers, including things like add-ons in terms of fit-out — improving the value to potential buyers,” said Mr O’Grady.

First-time buyers are paying an average of 4.7% less for houses than this time last year, while second-time buyers have experienced a 3.1% drop. All areas of the country are being hit by the property slump, the latest study indicates, with Dublin prices falling by 1.2% in September and by a total of 5.1% throughout 2007. In the rest of the country, there has been a fall of 3.4% this year, although prices rose slightly by 0.1% in September. The average price paid for a house in Dublin is now €405,343 while outside Dublin the average is €257,372. Last December, the equivalent figures were €427,343 and €266,339.

There was also a slight rise in house prices in the “commuter counties” of Louth, Meath, Kildare, and Wicklow of 0.1% in September, but overall in 2007 the prices went down by 5.3%. The average price in the commuter belt is €325,813 — down from €344,186 last December.

Meanwhile, the average price paid for a new house in September 2007 was €296,796, down by 1.9% this year, while that paid for a second-hand house was €295,398 — down 5.5%.

The house price index records values for three-bedroom semi-detached houses, regarded as a reliable yardstick for the rest of the market, and prices in this sector grew by 0.6% in September after a 0.9% growth in August, but values are down by 2.9% overall this year.