Property prices down 2.1% in June


The latest CSO residential property price index shows the biggest monthly fall in house prices in two years

THE PROPERTY market shows no sign of bottoming out as prices slid by a further 2.1 per cent nationally in June, according to the Central Statistics Office (CSO) residential property price index – the greatest monthly fall for two years.

This follows a drop of 1.2 per cent nationally in May, making the overall decline since June last year 12.4 per cent.

The CSO says prices have plummeted by 42 per cent nationally since February 2007 and by around 49 per cent in Dublin, which saw a 2.4 per cent drop last month.

Apartment prices have been a real casualty of the market, down 54 per cent on February 2007 levels.

Lorcan Sirr, head of research of the Faculty of the Built Environment DIT, says while the fall in prices is painful for vendors and beneficial for purchasers, “overall it is a process of stabilisation of this sector of Ireland’s economy, which is a positive.

“It means the market is rapidly finding its own level, which is one consistent with current levels of supply and demand, which in themselves are a reflection of lots of other factors such as bank lending practices, unemployment and changing salary levels.

The continuing fall also reflects a certain level of ‘wait and see’ on behalf of potential purchasers and indeed vendors.”

However, Ed Carey, residential chief of the Society of Chartered Surveyors Ireland (SCSI) says the CSO’s index is fundamentally flawed because it is based on loans drawn down and does not take into account cash deals, which he estimates make up over 30 per cent of sales.

“What buyers need is a transparent house price register. They want to know is how much a house up the street made last week, It doesn’t give up-to-date, localised information. The CSO index is not specific enough.

“There are micro-markets all over the place with some property types selling better than others. There’s been a shift away from three-bed semis while four-bed semis are getting viewings because they’ve become more affordable.”

He says the continuing decline in house prices is reflective of the fact that credit is strangled and consumer confidence is hit. “Until both rebound, that trend will continue.”

While Simon Ensor of Sherry FitzGerald maintains the plummet since the peak is underestimated by the CSO – his agency maintains the figure is closer to 60 per cent in Dublin and over 55 per cent nationally – he says the June figures issued by the CSO “look stronger than we would have anticipated.

“The evidence on the ground is that June was an active month, it didn’t feel like there was that level of softening.”

Meanwhile the Irish preference for houses over apartments continues which Ensor says is partly down to the fact that the fall in house prices means that more buyers can now afford a house with a garden.

“There are also developments coming to market through the receivers which are so discounted that there’s a ripple-out effect for quite a radius. People selling apartments have to be competitive.”

Lorcan Sirr says while the CSO’s figures are not 100 per cent accurate, they are the best we have to date. “It is most likely that they provide a good indication of the overall trends in the residential marketplace. In this respect, they are useful, welcome and overdue. It’s a pity we never had such official data over the last 10 years.”