Perfect storm has not abated yet
ANALYSIS:Anyone staring into the runes of the latest CSO property price data hoping to find proof that the market has bottomed out after more than five years of decline is likely to be disappointed.
Following three months of consecutive price increases, house prices fell again last month and, while the drop was relatively small – just 0.6 per cent, compared with 2.2 per cent in the same month last year – it is an indication that the perfect storm caused by buyer uncertainty, chronic lender recalcitrance, an unparalleled personal debt crisis and ongoing global economic turbulence has not abated.
According to the CSO figures, prices are exactly half what they were when the bubble was at its most inflated in early 2007. There is broad agreement across the industry, however, that this is a serious underestimation of the extent of the collapse, and figures from multiple sources show prices falling by more than 60 per cent since the bubble burst.
On the back of three relatively good months for the property sector, estate agents, brokers, investors and the Government were all hoping that the corner had been turned but a number of things are driving prices down again.
A rush to take advantage of a mortgage tax incentive which will be worth over €10,000 to first-time buyers over the next five years will certainly have led to a spike in demand since the beginning of the year.
However, that relief will be abolished on December 31st.
The new property price register may also have had a negative impact on prices in recent weeks. While it has been hailed for bringing transparency to the market it has also shown would-be buyers what actual buyers are really paying.