Shock of housing collapse still hitting prices

The shockwaves from the collapse of the property market in 2007 are still reverberating through the economy and impacting negatively on house prices, a report shows.

The latest annual survey by the Society of Chartered Surveyors Ireland reveals that house prices outside Dublin continued to fall in 2012, although the market in the capital for family homes has largely stabilised.

The SCSI report, based on a survey of 350 chartered surveyors around the country, said its findings showed there was only a limited recovery in the commercial and residential property sectors last year.

It claimed overall house prices across all sectors continued to fall during 2012, but at significantly lower levels than in previous years.

The SCSI said a more positive pattern could be discerned from the volume of commercial transactions, residential rents and investment from overseas.

It also claimed the lack of availability of family homes remains a key issue.

SCSI president Roland O’Connell said the data suggested Ireland was not dealing with a property crisis in 2013 but “the legacy of a crisis”.

The lack of uniformity had led to the emergence of “micro-markets” which suggested that there will not be a single point at which the property market hits the floor and recovery begins, said Mr O’Connell.

The SCSI warned that an increase in activity in the last quarter of 2012 could be distorted by the rush of first-time buyers availing of the mortgage interest relief deadline.

Cash buyers remain dominant in the residential sector, accounting for over half of all sales last year.

However, the SCSI said the commercial sector remained sluggish with retail rents in urban centres down in all regions except Connacht/Ulster.

Mr O’Connell said the lack of supply of new, prime stock coupled with the availability of finance remained the key issues in terms of broader stabilisation of the commercial sector.

He said it remained to be seen if there will be stabilisation during the course of 2013 and what effect the local property tax will have on house prices.

According to the SCSI survey, the average price of a secondhand three-bedroom semi-detached house in Dublin rose by 2.7% last year, while similar properties declined by 7.7% in Leinster, by 7.6% in Munster and by 7.1% in Connacht.

Residential rents in Dublin were up by 3% on average and by 2.5% in the rest of Leinster. However, they fell by 1% in Munster and 3.2% in Connacht/Ulster.

The report said prices for agriculture land performed well last year with the national average now standing at about €10,000 per acre.