Property prices down 40% on peak levels

HOUSE prices around the country have fallen by more than 40% from their Celtic Tiger peak in some parts of the country – and are likely to fall by 10%-15% more in the coming months.

According to the Daft.ie House Price Report prices for residential property fell by 19% during 2009 and are more than 30% below their peak levels of early 2007.

In Dublin, asking prices have dropped by up to 42%, while in Cork, Galway and Waterford asking prices fell by about 30%. In Limerick, drops were on average 25%, while elsewhere prices are on average 30% below their 2007 peak.

The survey found the average asking price for a house is now €242,000, €107,000 less than at the height of the boom.

“In the current circumstances it is hard to be optimistic on the prospects for the property market in the immediate future,” said Alan McQuaid, chief economist with Bloxham Stockbrokers who wrote the forward for the report. “Indeed, it is difficult to see the property market improving dramatically until labour market conditions get better and consumers become more confident about their job prospects going forward.”

He said the collapse in prices had seen many households falling into negative equity and, with thousands losing their jobs, the numbers in mortgage arrears had increased dramatically.

“The brutal impact of the recession on families is evident from the fact that almost 1,000 repossession orders were initiated in the High Court in 2009, up close on a third on the 2008 total of 758,” he said.

Mr McQuaid said he believed the economy will see positive year-on-year growth in the second half of 2010, and that may result in a slight increase in prices towards the latter part of the year.

“However, in overall terms, I would expect house prices to drop another 10%-15% on average this year, with Dublin seeing the biggest decline. But, as prices start to recover, Dublin should see larger gains than elsewhere, though the major cities should quickly follow the upward trend of the capital. I expect house prices to be higher on average in 2011 than in 2010, and should rise on a five-year view as the labour market returns to normal.”

He said any increase in house prices over the next few years will be in single digits only.