Property woes to continue despite reform
Speaking on RTÉ yesterday, Mr Cowen said his reforms were “a confidence-boosting measure but not a cure” for the market, which has seen prices fall 4.7% in the past year.
“At the moment there is an overhang in the market. There was record output [of new homes] way beyond what was required, and now the market is correcting itself and that will continue.
“Myself and senior civil servants came up with a counter-cyclical measure that is simply a confidence-building measure. It is not a panacea but it does provide people with a sense of direction and certainty,” he said.
Estate agents claim Mr Cowen’s stamp-duty cuts will breathe life into the stagnating housing market during 2008.
In Wednesday’s Budget, Mr Cowen decided no stamp duty would be payable on the first €125,000 of the value of a house purchase but then 7% on the balance up to €1 million.
Ireland’s biggest estate agents, Sherry FitzGerald, said the cuts would stimulate demand from first-time buyers and in turn help homeowners wanting to trade up to a bigger home.
“First-time buyers stopped [buying] in August and September last year when questions over stamp duty were first raised,” said Marian Finnegan, the firm’s chief economist.
“In turn that affected people wanting to trade up as they then could not sell their homes. That started off a chain of events affecting all property transactions.”
Earlier this year Mr Cowen abolished stamp duty for first-time buyers, encouraging more buyers into the market and triggering more sales.
“The further changes in the Budget will further enhance that,” said Ms Finnegan.
The latest figures from the Permanent TSB and ESRI housing survey show average prices fell 4.7% in the 12 months to October and stood at €295,469 compared to €309,963 the year before.
Yesterday Ms Finnegan reckoned house prices during 2008 will stabilise or at best rise modestly in line with inflation, though she admitted: “It is too early to tell.”
Mr Cowen’s reforms have also helped by putting an end to the uncertainty sparked by public speculation over the future of stamp duty, she said.
The reforms also mean stamp duties on the balance of house prices over €1m is now set at 9%, meaning a maximum saving of €28,750 for buyers.
Figures from the propertynews.com website yesterday showed continuing declines of an average of 5.6% in the asking prices being advertised by sellers.
One seller in Donadea, Co Kildare, has reduced the price of a home from €460,0000 to €260,000, a fall of €200,000 or 43.5%.
A spokeswoman for property website daft.ie said asking prices — instead of the final selling price — were a useful and up-to-date barometer of confidence in the market.
“When they’re up people are buoyant and when they are down people are not confident,” she said.
Daft.ie latest figures show an average fall of 5.2% in asking prices.
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