House prices fall more than a fifth since 2007 peak

HOUSE prices have fallen by more than a fifth since the property bubble peaked in February 2007, the latest market review revealed yesterday.

Average prices are back to levels not seen since the heady days of the construction boom in summer 2004, according to a permanent tsb/ESRI study.

Prices paid last month are down just over 21% in the last two years, with a 10.9% fall in the last 12 months.

Niall O’Grady, Permanent TSB general manager, said demand was not expected to grow until confidence in the economy is restored.

“Ongoing low demand, combined with a significant overhang of properties for sale, continues to drive prices down, particularly in segments such as first-time buyers and houses in Dublin. Any improvements in affordability due to lower prices and lower interest rates will likely be ignored until economic confidence returns.”

House prices across the board were down 6.2% in the first five months of the year, with first-time buyers reaping the biggest rewards as houses at the cheaper end of the market fell 9.2%.

Aine Myler, president of the Irish Auctioneers and Valuers Institute, said while demand was slow, the current rate of decline in prices appeared to be easing.

“They’re (Permanent Tsb/ESRI) not wrong about the fact that confidence is really what drives any market and it’s absent at the moment,” she said.

“Anecdotally, at this point in time, although transaction levels are still low and prices still under pressure, a few more transactions have taken place,” said Ms Myler.

“Correction is ongoing but, as to what extent the pace of that correction is, is a little bit of anybody’s guess, but it appears anecdotally that the rate of decline has diminished.”

The study found a drop in prices of 1.3% for May.

The average price paid nationally for a house last month was €245,295, compared with €311,078 in February 2007.

Ms Myler said the market was not expected to stabilise until the end of this year or early next year.

Other key findings:

* Prices down 6.2% in the first five months of the year.

* Average house prices in Dublin slumped 14.8% in the last year to an average of €323,973.

* Outside of Dublin prices fell 10.5% in the 12 months to May reaching €213,491.

* House prices in the capital’s commuter counties fell 17.6% in the 12 months to May (now €252,811).

This compares with a fall of 17.8% in the 12 months to April.