Valuations have become increasingly hard to get right as the market is starved of real information on house prices, writes CLIODHNA O'DONOGHUE

HOW DO YOU accurately value property in a market where prices are falling by the month and where price information is protected by a Government act? That’s the difficulty facing buyers and sellers alike, and the estate agents who have to negotiate between them.

Unlike many other countries around the world, where house prices can be accessed easily and transparently, there is a dearth of accurate information on Irish home prices.

Our data protection legislation forbids the publication of private treaty sale prices (the majority of sales) without the consent of both parties to the transaction. This is rarely forthcoming despite the fact that all this information must be passed onto the Revenue Commissioners for stamp duty purposes, registration and other taxes.

Consequently, the only figure that is available on any given property is the asking price.

These days, with buyers bargaining furiously, an asking price cannot be taken at face value: anecdotal evidence suggests that real prices can be anywhere between 10 and 50 per cent below asking price.

In this volatile market, a bad news story, politically or economically, can knock a few more percentage points off a sale price overnight, while a negative news headline can scupper a sale altogether.

Consumers, already suffering from a wholly unsatisfactory vacuum of accurate data on property prices, are also inundated with a plethora of different surveys published at different times and all based on different criteria which serve to do little other than confuse the market place and undermine confidence further. For example, the latest DOE (Department of the Environment) figures from the third quarter of 2008 indicate that the average new home price nationally has fallen to €301,680, or down 5.5 per cent on the same quarter in 2007. The average second-hand home nationally is €335,762, down by over 10 per cent.

Meanwhile the Permanent TSB/ESRI house price index figures indicate that in January, average new homes prices nationally dropped to €263,000 while average second-hand homes nationally were worth €253,000.

In the past, auction sales could be relied on to give a snapshot of the market.

However, with auction sales down an estimated 90 per cent on previous years, the sector can no longer be relied on to be an indicator of values.

So it’s against this very volatile backdrop that estate agents try to establish true valuations when, for decades, property prices were in an upward-only spiral.

Few within the industry have experience of a recession like this one where prices have fallen for the last two years and most vendors are knocking between 20 per cent and 50 per cent off the original asking price.

“These may look to be alarming figures at first, but remember that in certain areas of Dublin the residential market increased by 25 per cent in the spring of 2006 alone,” says Robert Ganly, partner and head of residential for Knight Frank Ireland.

“It is my view that we are generally trading on values that correspond, depending upon location, to the years from 2002 to 2004.”

Michael Grehan of Sherry FitzGerald advises vendors to ask how the agent decided on a specific price, using what criteria. “Invariably property on the market has gone through one, two or three price reductions but there is still a big difference between vendors’ expectations and the eventual sale price.”

With no obvious comparison it is important to check out websites in “real time”, not prices from six months ago, he advises.

Kate Sisson of Gunnes agrees. “Take a location like St Alban’s Park in Dublin 4. Three-bedroom semis were realising upwards of €2.5 million but this year prices are in the region of €1.5 million to €1.6 million.”

To make matters even worse, where once valuations were formalities to be broadly agreed on between estate agents representing buyers and sellers, now they are being tested. Banks or buyers’ agents may decide a property is not worth the valuation figure and push for lower prices.

Sometimes this works and a type of fire-sale takes place; other times, most evident in marital separation cases and bank foreclosures, buyers end up getting very good value for money.

The Society of Chartered Surveyors believe that some form of property register should be permitted and implemented as is the norm in the UK and elsewhere in Europe.

This would require a change in legislation in order to avoid a breach of data protection regulations.

Edward Carey, president of the IAVI (Irish Auctioneers Valuers Institute), also maintains that the economy relies too much on the property market to enable inappropriate legislation stand in the way of a properly informed market.

Last summer the institute called on the Government to provide a long overdue degree of certitude on property prices but the silence in political circles since has been deafening.

The provision of such a national database, providing actual residential sale price details, could stimulate the market, take away any sense of distrust and provide absolute transparency to everyone involved in buying and selling their home.

But it would be incorrect to assume such an index would “save all”. After all, property values are dropping worldwide despite the fact that many have accurate information available to the public through comprehensive websites and national databases.

That said, it would mean less hidden negotiations and a level playing field for all. It would also appeal to overseas investors who rely on databases such as this for commercial investments worldwide.

A spokesman for the Data Protection Agency confirmed that the Oireachtas could progress the change in legislation as happened in the UK in 2000, when the different political parties agreed to change the legislation despite some controversy at that time.

He also suggested that if estate agents shared information to form an index based on average price per sq ft on an individual road, rather than identifying any individual property price, that it would not breach data protection law.

Liam Bailey of Knight Frank UK’s research office said the UK’s Land Registry registers every piece of property with owner and owner details, right of way, title, ground rent, date of sale, asking and selling price and even records if there is a mortgage on the home.

“For as little as £3, anyone can print off these details about a property,” he says, adding that the facility – also fondly referred to as the ‘Snoops’ Charter’ – gives more information to buyers and sellers alike and encourages a sense that everything is above board.

Liza-Jane Kelly of central London-based Marsh and Parsons concurs, adding that several different indices are available at different costs, with some for estate agents only as opposed to the general public.

Glowbricks and Zoopla are two websites which are open to all and free of charge, she says. Another, Lonres, charges agencies different rates depending on the number of branches using it.