HOUSE PRICES fell 1.9 per cent in April as potential buyers continued to hold out for further declines in the market before purchasing a property, according to the latest edition of the Permanent TSB/Economic and Social Research Institute (ESRI) house price index.
Last month’s decline in average national house prices marks an acceleration in the monthly drops in prices recorded in the first three months of the year, which were 1.4 per cent, 0.8 per cent and 1 per cent in January, February and March respectively.
Property prices have now fallen back to levels last seen in summer 2004.
According to the index, house prices have fallen 4.9 per cent so far in 2009, but prices for first-time buyers have dropped at the steeper rate of 7.9 per cent.
The average price paid for a house in April 2009 was €248,640, compared with €261,573 in December 2008 and a peak of €311,078 in February 2007.
“This is the fastest rate of decline in national prices that we have seen to date since the index started in 1996,” said Permanent TSB’s general manager of business strategy Niall O’Grady.
“The particularly dramatic reduction in prices for first-time buyers reflects their reluctance to buy in a market that is still declining and where unsold properties are being reduced further.”
However, the Professional Insurance Brokers Association said “excessively tight” mortgage lending criteria were preventing first-time buyers from entering the market.
“The banks have gone from one extreme to the other. Normal lending must be restored to the marketplace, and that requires more urgent intervention by the Government,” said Rachel Doyle, director of the insurance association’s Network Services.
Alan McQuaid, economist at stockbroking firm Bloxham, said developers were being forced to drastically scale back asking prices in an attempt to clear existing stock, which was flooding the market with new properties and exacerbating the declines in prices.
“The bottom line is that the Irish property market is heavily entrenched in a deflation spiral and, given the myriad of factors that have led to its creation, it is unlikely to recover any time soon,” Mr McQuaid said.
Over the 12 months to April, properties in the commuter counties of Louth, Meath, Kildare and Wicklow saw the greatest reductions in their price tags, according to the index.
House prices in those counties fell 17.8 per cent over the period, compared to a drop of 14.3 per cent in Dublin house prices over the same period.
The average price paid for a house in Dublin was €331,206 in April, compared to an average price of €214,444 outside Dublin. In the commuter counties, the average price was €254,281.
House prices: in numbers
4.9%
The average percentage price fall in 2009. Prices for first-time buyers have dropped 7.9 per cent
€248,640
The average price paid for a house in April. This compares with €261,573 in December 2008 and a peak of €311,078 in February 2007
€331,206
The average price paid for a house in Dublin in April. This compares with an average price of €214,444 outside the capital. In the commuter counties, the average price was €254,281
