House prices fall for first time in four months

Hopes of a recovery in the property sector received a setback yesterday after the latest official figures showed house prices falling by 0.6 per cent in October.

While the rate of decline is significantly less than it was at the same point last year, it is the first time since June that monthly data from the Central Statistics Office (CSO) has shown house prices falling.

Its Residential Property Price Index is now the benchmark for the performance of the property market, although it does take into account cash transactions, which now make up a significant portion of the market.

Its latest survey indicates prices fell by 0.6 per cent in October after increases of 0.2 per cent in July, 0.5 per cent in August and 0.9 per cent in September. The CSO recorded a decline of 2.2 per cent in October last year.

In the year to the end of last month, residential property prices nationally fell by 8.1 per cent. A fall of 15.1 per cent was recorded over the same period a year earlier.

Cost of homes

The new figures indicate a significant difference between the property market in Dublin and elsewhere in the State.

While the cost of homes outside the capital fell by 0.9 per cent in October, Dublin appears to be more stable and prices dropped just 0.2 per cent in the month.

The CSO figures show house prices in Dublin are now 55 per cent off the high point recorded in February 2007, while the value of apartments in the city is 63 per cent less than in early 2007.

Across the rest of the State, the price decline was more modest since the height of the boom and residential property prices are now 47 per cent off their height.

Rachel Doyle of the Professional Insurance Brokers’ Association said the latest price decline was unsurprising.

She said the price increases throughout the summer could be explained by first-time buyers looking to take advantage of the Government’s mortgage interest relief scheme, which is coming to an end next month.

Ms Doyle added that despite the fall in prices, repeated broker surveys had pointed towards pent-up demand.

“Over 55 per cent of brokers are experiencing an increase in demand for mortgages and there are indications that, overall, consumers are less fearful about the economic situation.”

She said increases in demand would normally “result in a consequent increase in house prices but the current market is beset by extraordinary factors”.

House prices By the numbers

8.1%

The year-on-year price decline in house prices across the State.

63%

The percentage fall in the average price of an apartment in Dublin since February 2007.

0.2%

The fall in house prices in Dublin in October.

0.9%

The fall in house prices across the rest of the State in October.

50%

House prices across the State are now exactly half what they were just before the bubble burst.