House prices at 50% of peak values

HOUSE prices have plummeted over 50% since the peak of the housing boom, according to two separate surveys published today.

The average asking price is just over €175,000, more than half of the €366,000 demanded when property prices peaked in 2007, with some experts predicting double-digit falls again this year. According to Daft.ie, asking prices fell almost 8% between last September and December — the largest quarterly fall yet.

The 7.7% fall during the final quarter of 2011 meant the overall drop for the year was 18% — equivalent to the other declines in the past thee years. In the quarter, Dublin saw an average fall in asking prices of 8.9%, while the fall in Cork was 5.4%.

Ronan Lyons, economist with Daft.ie, said that until the final quarter of this year, the case could be made that falls in house prices had been slowing.

Mr Lyons said such a dramatic fall in asking prices at the end of last year could reflect greater realism on the part of sellers, who are cutting their prices to compete with firesale auctions.

He also suggested the sharp fall reflected the impact of international uncertainty and pessimism about Ireland’s economic future.

He said while predicting the bottom of the market was a “mug’s game”, incomes and rents suggested a fall of about 60% from peak prices was to be expected. He said the asking price in some parts of Dublin had already fallen 60%. “What the market needs is stable prices, not rising ones,” he said.

Mr Lyons said a recovery in the property market meant an increase in transactions, not prices.

“This is ultimately down to the banks who will not resume lending until the Government’s stress tests stop punishing them for doing so.”

Mr Lyons warned that without finance being made available, there was a risk prices could fall by up to 65% before coming back.

He said asking prices in Dublin had fallen by 55% below the peak and about 49% elsewhere.

Meanwhile, MyHome.ie said transaction prices in Dublin were back to 2000 levels. It put the annual rate of decline in asking prices last year at 13%, with house prices down by 2.4% in the last quarter.

According to MyHome.ie asking prices nationally are down to 43% compared to the peak in the third quarter of 2006, with Dublin prices down 50% over the same period.

New houses saw the smallest price fall — just 1%, with the average price at €230,000. The average price of a secondhand home is €237,000, down 2.5%.

MyHome economist Annette Hughes, who compiled the report, warned that prices would not stabilise without sustained economic and employment growth.

“Right now the ongoing debt crisis in Europe combined with less than encouraging news on the international economic front, as well as the fiscal consolidation programme under way means the likelihood of an acceleration in economic growth in 2012 is questionable.”