Jury still out on fate of housing market
Yesterday, the results of the latest index showed house prices actually fell by an average of 7.3% last year.
A welcome correction in the market or the first winds of a dramatic housing slump? The jury remains out.
However, more warning signs emerged yesterday which suggests the trend of falling property prices is set to continue in 2008.
The 2007 edition of the Permanent TSB/ESRI survey revealed the average price of a house nationally decreased by e23,000 to almost e288,000.
The authors of the country’s leading property index also warned house prices can be expected to fall by a further 5% this year.
Elsewhere, the Central Bank predicted the construction sector would shrink further in 2008 with only 55,000 homes likely to be built this year compared with 78,000 last year.
Unemployment also rose to 4.9% last month as 7,800 extra people signed on the Live Register. Figures from the Central Statistics Office show the number of people on the register is 179,400 — the highest total in recent years.
Legislation regulating subprime lending here also came into effect yesterday in a move likely to reduce housing market activity.
According to the Permanent TSB/ESRI survey, overall prices across the housing sector fell by 7.3% on average during 2007 in contrast to growth of 11.8% the previous year.
The decline in house prices was particularly noticeable during the second half of last year amid ongoing concern about interest rates, stamp duty and the stability of international financial markets.
Prices fell between July and December 2007 by 4.7% compared with 2.6% for the first six months of the year.
The survey shows the average price paid for a new house last year was e290,296 — a decrease of more than e12,000 on 2006 prices or a drop of 4.1%.
The market for second-hand homes fell at more than double the rate of new homes — down 9%. Permanent TSB’s head of marketing, Niall O’Grady, said the survey showed the housing market had finally come “off the boil.”
However, he said the latest decrease had merely placed house prices back at the position where they were at the start of 2006.
He said consumer sentiment and interest rates would remain the key factors in how the property market would perform during 2008. Nevertheless, he expressed confidence that falling house prices coupled with rising rents would result in increased activity in the sector.
The survey also showed house prices in Dublin fell at a slightly greater pace than outside the capital in 2007.
The average house price in Dublin last year fell by 7% (or almost e30,000) to e397,507, while homes in the rest of the country decreased by 6.4% (or e17,000) on average during the same period.
On a regional basis, house prices in the midlands recorded the sharpest decline last year — down 8.2% followed by the mid-east (-7.4%), the west (-6.9%) and mid-west (-6.3%).
Below-average falls in property prices occurred in the border regions (-4.1%), the southeast and southwest (both -5.5%).
