Property prices fall to 50% of 2007 peak

THE collapse in property prices shows no sign of abating as figures show Dublin residential property prices have collapsed by over 50% since the peak of 2007.

The latest residential property price index for August from the CSO show house prices in Dublin are now 48% lower than at their 2007 peak.

The collapse in the price of apartments in Dublin is even more stark, with prices 57% lower than at their peak in February of 2007. The latest fall in prices means the peak-to-trough decline in residential property prices nationally is 43%.

In the year to August, residential property prices at a national level fell by 13.9%.

This compares with an annual rate of decline of 12.5% in July and a decline of 10.8% recorded in the 12 months to August last year.

Residential property prices fell by 1.6% in August. This compares with a decline of 0.8% recorded in July. Last year, no change was recorded between July and August.

In Dublin, residential property prices fell by 3.8% in August and were 14.9% lower than a year ago.

Dublin house prices fell 3.4% in August and were 14.7% lower compared to a year earlier. Dublin apartment prices fell 6% in August and were 17.4% lower compared with the corresponding period last year.

The price of residential properties outside Dublin fell by 0.3% last month, compared with an increase of 0.2% recorded in the same month of last year. Prices were 13.2% lower than in August of last year.

Conall Mac Coille, chief economist with Davy Research, said prices were likely to fall throughout the remainder of the year.

“We know that mortgage lending remains weak, so measured prices are based on a very low level of transactions,” he said.

“So falling prices reflect distressed vendors being forced to sell despite weak market conditions. Hence, residential property prices are likely to continue falling through 2011.”

Frank Conway, director with Irish Mortgage Corporation, said that a chronic lack of lending appetite at Ireland’s primary banks is hampering buyer activity and buying opportunities.

“A functioning property market can only exist with the support of a functioning banking system,” he said.

“Without the latter, the other will fail, which is exactly what is happening at the moment.”

Mr Conway said that, as a result, mortgage lending is on course to fall to a 40-year low this year.

“Banks have now gone too far in the opposite direction by restricting lending,” he said.

“Despite massive state support of the banking sector, there is little evidence that banks are preparing to return to support first-time buyers any time soon.”