Survey: House price slide cancels gains of past four years

HOUSE prices continued to slide last month — canceling out all the gains in value for the previous four years.

The latest price survey by Permanent TSB in conjunction with the Economic and Social Research Institute (ESRI) shows prices nationally in February had fallen back to the same level as they were in February 2005 when the property boom was still in full swing.

Price statistics are gathered from mortgage applications for both houses and apartments and averaged out at e255,999 per dwelling last month, meaning the average home has lost just under e50,000 since prices were at their peak in February 2007. Homes outside the capital held their value better, falling by 0.9% in February compared with a 2.1% slump for homes in Dublin. In money terms, that works out at e339,042 per dwelling in Dublin last month and e220,741 per dwelling outside the capital.

Permanent TSB’s general manager of business strategy Niall O’Grady said the general consensus that could be gleaned from the behaviour of the home-buying public seemed to be that prices would fall further. “While affordability is improving for customers due to the series of interest rate reductions and two consecutive years of reductions in house prices, customers seem unconvinced that the market has bottomed out yet.”

There are, however, some indications the dramatic slump in prices has slowed up somewhat. Nationally, average home prices fell 0.8% in February, but the fall in January was 1.4% and in December, 0.9%.

Similarly, the comparison for figures year-on-year show a steady rather than rapid slide. Between January 2008 and January 2009, prices fell 9.8%, while the equivalent figure for the period between February 2008 and February 2009 was 9.7%. Homes in the commuter counties of Louth, Meath, Kildare and Wicklow took a far bigger hit, however, with losses in value running at twice the national average. Prices in those areas fell by a massive 17.8% between February 2008 and last month.

Buyers, and in particular, first-time buyers, will have taken heart from the falling prices. According to data from mortgage applications, the kinds of homes bought by those getting on the first rung of the property ladder in February were 2.8% cheaper than they were just a month earlier and a substantial 15.2% down on the same month in 2008.

They will also have got better prices if they opted for existing properties rather than new homes as the price of new homes dropped by 0.6% in February and 9.2% year-on-year compared with a 1% drop in February and 11.3% drop year-on-year for second-hand homes.