RESIDENTIAL PROPERTY values tumbled by an average of 20 per cent in 2009, with apartments and large houses in Dublin displaying the most dramatic price corrections, new research has shown.

According to the latest annual survey of almost 1,500 members of the Irish Auctioneers and Valuers Institute (IAVI), sales of residential properties were virtually non-existent for most of 2009. The IAVI believes that prices are now close to hitting “rock bottom” in some parts of the market.

However, although tentative signs of a pick-up in activity emerged in the Dublin residential sales market in the last quarter of the year, the IAVI warned that a major increase in property prices is unlikely to materialise for some time yet.

The drop in values last year varied considerably by property type and location. At one end of the scale, the price of second-hand four- and five-bedroom detached houses in Dublin fell by 23 per cent last year, compounding a similar decline of 22.5 per cent in 2008.

By comparison, second-hand two-bedroom town houses in Connaught held their value relatively well, although prices still fell by 15.7 per cent in 2009. This comes on top of a 16.5 per cent fall a year earlier.

The value of one- and two-bedroom apartments in Dublin also declined significantly last year. Prices of new properties in this category slipped by more than 21 per cent, while second-hand properties were about 23 per cent cheaper by the year end.

“These annual results are in line with our expectations for 2009 and consistent with our belief that the average residential property values would decline 40-50 per cent from peak to trough,” commented IAVI president Aine Myler. “The survey results indicate that the market floor is close, if we have not reached it already.”

Independent economic consultant Geoff Tucker, who conducted the survey on behalf of the IAVI, said that a market-wide recovery is unlikely to begin this year, despite the pick-up in activity in the Dublin residential market in the closing months of 2009.

“It will probably be well into 2011 before this occurs,” Mr Tucker said.

He also predicted the emergence of a “two-speed” recovery, with the Dublin market likely to recover more quickly than other parts of the country due to its higher population and employment density.

Although the residential rental market remained reasonably active in 2009, a flood of unsold new homes onto the market combined with net outward migration pushed down rental values. According to the IAVI survey, rents have shrunk by between 15 and 23 per cent over the last two years.

Residential rents in Dublin fell by 16.4 per cent in 2009, having dipped by just under 8 per cent in 2008, whereas rents in Munster were only 10.4 per cent down on 2008 levels.

Activity in the commercial property sector – both on the sales and retail side – also effectively “seized up” in 2009 as the economic downturn intensified.

Mr Tucker additionally attributed this stagnation to the establishment of the National Asset Management Agency (Nama). “With everyone waiting to see what loans will be transferred to the new agency and how it will deal with them, nobody was (or is) willing to transact any deals,” he said.

“Very little transactional activity will occur in the commercial market until Nama is operational and financing issues are resolved,” he said.

The survey results indicate that rental levels in prime retail zones in Dublin, such as Grafton Street, fell from €9,422 per square metre at the end of 2008 to €7,042 by the end of 2009.

According to the IAVI, most development land values have at least halved since the market peaked, with some values down almost 75 per cent.