Fall in house prices fastest on record

HOUSE prices plunged by the fastest rate on record with more than €60,000, on average, being wiped off their value since a peak of two years ago.

The average price of a house fell 1.9% in April, the biggest monthly drop since the permanent tsb/ESRI house price index started in 1996. This compares with a drop of 1.0% in March, 0.8% in February and 1.4% in January.

In the first four months of this year, prices have plunged almost 5% and by close to 8% for first-time buyers. In the same period last year, prices were down 3.3%.

Business strategy manager at Irish Life, Niall O’Grady said: “The particularly dramatic reduction in prices for first-time buyers reflects their reluctance to buy in a market that is still declining and where unsold properties are being reduced further.”

In the 12 months to April 2009 prices have plunged 10.7%.

The average price paid for a house nationally in April was €248,640, compared with €261,573 in December and a peak of €311,078 in February 2007.

Bloxham Stockbrokers believe house prices will fall a further 10% to 15% before they bottom.

Alan McQuaid, of Bloxham, said: “Affordability has eased significantly as most banks have fully passed on decreases in the ECB main refinancing rate and offer incentives to potential first-time buyers.

“However, despite improved affordability and record low interest rates, the lack of consumer confidence in the economy, and uncertainty about job prospects going forward, are keeping potential buyers out of the market.”

House prices in Dublin fell by 14.3% in the year to April, while there was a reduction of 10.8% for houses outside Dublin. The average price paid for a house in Dublin was €331,206 and €214,445 outside Dublin.

There was a fall of 17.4% in prices for first-time buyers in the year to April to €206,530, while prices for new houses dropped 2.6% to €249,785.

Prices for second-hand houses dropped 1.5% to €246,390, while prices in the commuter counties of Dublin fell by 17.8% to €254,281 in the year.

Meanwhile, property website daft.ie reported that rents fell by almost 16.4% in the past year.

It said the stock of properties available for rent on Daft has more than doubled from 10,817 in April 2008 to 22,161 in April 2009.

The average rent nationally stands at €840 a month, down from €1,000 in the same period last year.