12% annual house price fall as slump continues
A lack of buyer credit being made available to potential buyers and rising interest rates and unemployment have all been cited as downward forces on prices.
The news comes with the European Central Bank about to indicate it could raise interest rates again as early as next month.
Latest Central Statistics Office data found that house prices are down 40% from their peak, with apartments losing more than half their value.
House prices in Dublin are almost 46% lower than at their peaks of early 2007, while the fall in prices in the rest of Ireland is 36%.
Property prices fell 12.2% in the 12 months to April, compared to a fall of 13.7% in the 12 months to April 2010.
Prices were down by 1% in April alone, which compares with a fall of 1.7% recorded in March and a fall of 0.7% in April 2010.
Nationally, apartment prices were down 6.6% last month.
Alan McQuaid, chief economist with Bloxham, said that given the weak labour market conditions and the continuing shortage of bank credit, it is hard to be optimistic on the property market’s immediate prospects.
However, he said that, looking further ahead, house prices should increase on a five-year view as the labour market normalises.
“That said, the level of any rise over the next few years is only likely to be in single digits as banks adopt a more cautious stance to lending than in the Celtic Tiger era, interest rates return to ‘normal’ and the likely introduction of a property tax for principal homes of residence all weigh negatively on the market,” he said.
The latest Reuters survey of Irish economists suggests house prices are likely to fall a further 7% this year.
Goodbody economist Dermot O’Leary said the national average house price is €180,000, back to levels last seen in early 2002.
“It is clear an unprecedented correction has taken place, but until the banking sector shows real signs of rehabilitation, facilitated by the restructuring efforts currently ongoing, there is little reason to believe that prices will rise,” he said.
Frank Conway, director of the Irish Mortgage Corporation, said access to finance is a major problem for many first-time buyers.
“In fact, if anything, access to finance has deteriorated over the course of the past 12 months,” he said.
Meanwhile, data in Britain showed house prices there rose 0.1% in May, failing to bounce back from April’s 1.4% fall, the biggest drop in seven months in April, according to Halifax.
