Dublin property prices fall 12.5% in 12 months

THE average price of second-hand property in Dublin fell 4% in the first quarter of the year, bringing the annual drop to 12.5%, according to a report from Sherry FitzGerald.

The figures reflected the national picture, which saw an annual drop of 13.2% during the 12 months to March 2011.

Marian Finnegan, chief economist with Sherry FitzGerald, said the pace of price deflation remained quite strong in the opening quarter of the year, a reflection of the negative consumer sentiment, concerns surrounding the wider economy and interest-rate cycle. First-time buyers remain the most dominant cohort in the market place, Ms Finnegan said.

According to the report, Dublin house prices have fallen 55.8% from their peak in 2006, while the national market has fallen by 51.1%.

This in effect means that prices in Dublin and Ireland are back at levels achieved in the second quarter of 2002.

An analysis of the stock of available property for sale in the second-hand market in January reveals a total of 53,300 properties for sale nationwide, of which 6,800 were located in Dublin city and county. Both statistics are lower than levels recorded in July 2010.

First-time buyers remain the most active in the market, accounting for 45% of the properties traded in the year to date.

According to Ms Finnegan, the stock of available second-hand properties is continuing to decline, with limited new properties coming on the market.

“Furthermore, there is growing anecdotal evidence of a strengthening rental market,” she said.

“The greatest obstacle for all markets in the year ahead lies in the availability of credit. As previously stated, true stability will only be achieved with a normalisation of the credit flow in the economy.”

Elsewhere, property consultants CB Richard Ellis revealed there was only one investment transaction completed in the Irish property market in the first quarter of 2011, a factor they directly attribute to plans by the Government to retrospectively review rent provisions in existing business leases.

The property consultants earlier this year warned that a lack of clarity about these Government proposals would hamper investment activity in the Irish market. The only investment transaction signed in Ireland during the first quarter was the sale to Google of its premises Gasworks House and Gordon House at Barrow Street in Dublin 4.

Yesterday, Irish Nationwide Building Society announced its home loan standard variable mortgage rate would increase by 0.65% to 4.4% with effect from May 1.