House prices decline by 3.1% during first three months of year

HOUSE prices fell by an average of 3.1% during the first three months of the year, according to the latest report by property website Daft.ie.

The fall was the second-smallest quarterly decline since 2008.

According to the report the national average asking price for property has fallen 43% since the peak about four years ago and now stands at €210,000, while the average time taken to sell a property is now nine months, the same as a year ago.

In Dublin, asking prices fell by 4.1% during the past three months, while in Galway, prices fell by almost 5%.

In Cork and Waterford, prices dropped by about 3%, while Limerick city saw falls of just 2% between January and April of this year.

Outside the main cities, asking prices fell by an average of 2.7% — the smallest fall in three years.

Daft.ie economist Ronan Lyons suggested there was an ongoing mismatch between supply and demand that is pushing prices further down.

“Prospective buyers find it difficult to get the finance, while owner occupiers are often restricted by negative equity. As a result, the market is moving very slowly.

“Of the 3,000 properties posted for sale 15 months ago at the start of 2010, one in three is still for sale, although in Dublin the figure is closer to just one in six,” said Mr Lyons.

Chief economist with Kleinwort Benson Investments, Eoin Fahy, said he believed a number of factors continued to keep house prices down.

“The first wave of house prices falls — from 2006 until now — have been driven largely by high initial prices, unemployment and a hugely restricted supply of credit,” said Mr Fahy.

“A second wave of factors may keep downward pressure on house prices. This will be mainly due to higher interest rates, but there is also an outside risk to house prices from repossessions and even from strategic default.

“The latest Daft survey shows that the fall in prices may be beginning to slow, and it’s likely that the relative improvement is because some of the factors driving house prices down are moderating.

“Jobs are not being lost at anything like the pace that we saw a year or two ago, valuations are certainly not expensive on almost any measure, and while the credit crunch will certainly not go away, it is unlikely to get much worse.”

However, Mr Fahy added that while he believes there are genuine grounds to think that the economy as a whole has passed the worst, he is unconvinced that the same can be said about the housing market. “Significant risks remain, and higher interest rates in particular could do further damage to house prices in the months ahead.”