House prices fall 4.5% in Q2 - report

The average price of a second-hand house fell by 4.5 per cent between April and June this year, according to a survey released by estate agents Sherry FitzGerald today.

This fall brings to 10.2 per cent the reduction in house prices over the last 12 months, the survey results show. The reduction during the first quarter of the year was 1.9 per cent, suggesting that the rate of decline is accelerating.

Properties in Dublin have seen more severe price falls with houses costing 5.4 per cent less on average when compared with the first three months of the year. Over the year the fall has been 11.4 per cent.

Marian Finnegan, chief economist with Sherry FitzGerald said difficulties getting loans and the threat of further interest rate increases had contributed to price falls.

Since autumn 2006 average house prices have fallen 16.5 per cent, effectively returning prices to 2005 levels.

"If one takes in consideration consumer price index inflation the real price deflation is closer to 25 per cent, a factor which suggests that the current phase of price correction is much more advanced than many commentators or other indices suggest," Ms Finnegan said.

First time buyers purchased 37 per cent of houses sold in the second quarter, an increase of 4 percentage points on the same period in 2007.

Over the same period the number of properties bought by investors declined from 18.6 per cent to 10.2 per cent.

A quarter of properties sold over the last year were investment properties with 22.6 per cent of sellers seeking to move to a larger property. Of the remainder, 27 per cent of vendors were selling ahead of moving to a different county.