10% drop in property prices forecast for 2010

Property prices have been forecast to fall by a further 10% next year.

Website MyHome.ie in its latest property barometer published today predicted that the market will see some sectors showing signs of stabilisation in the second half of next year, in line with a gradual improvement in the economic position of the country.

"In addition, first time buyers will see further improvements in affordability, due to low interest rates, a further reduction in prices and improved credit flows following the transfer of “bad loans” to NAMA from the main financial institution," according to a statement.

The report highlights the continuing weakness of the construction sector saying this will be the last sector of the economy to bottom out.

It forecasts that private housing output will decline to 11,000 units nationally and new private housing commencements could fall as low as 6,000 in the current year

The report acknowledges that whilst the economy is forecast to move out of recession from the middle of the year onwards, a true “bottoming out” for the residential property market will only happen once unemployment peaks and employment levels return to growth again.

Asking prices fell by 14.6% nationally in 2009, according to the barometer, with an 18.3% fall in Dublin.

Overall prices in the capital are now 31% below their peak levels with the average asking price in the capital now at €370,137.

“2009 will be long remembered as the worst year in the Irish residential property market but things will improve in the year ahead," said Angela Keegen, Myhome.ie managing director.