Reports do not reveal true price drop
Recent house-price surveys are based on the asking price rather than what the property actually sold for, writes Orna Mulcahy, Property Editor
HOUSE PRICES IN some parts of Dublin have dropped by as much as 50 per cent since the peak of the boom in mid-2006, according to the country’s leading estate agency chain. It claims that house price surveys have consistently underestimated the real fall-off in values.
Michael Grehan, managing director of Sherry FitzGerald, says that a report this week by property website Daft.ie, which showed a 15 per cent fall in house prices last year, doesn’t tell the full story, since the research is based on asking prices rather than those actually achieved.
Information on actual sale prices has been restricted since last year when the National Consumer Agency told agents that they could no longer reveal sales results without written agreement from both buyer and seller. Property sale information is covered under the Data Protection Act.
Grehan argues that while Sherry FitzGerald’s own property indices shows an average price correction of 30 per cent, since the peak, he knows of properties that appear to have taken cuts of 40, 50 and even 60 per cent, in at least one case. The size of the drop has been confirmed by other agents who have seen prices fall through the floor as buyers bargain aggressively. “The lack of publicly available information on actual sales prices puts buyers at a disadvantage as there is often a big difference between an initial asking price and the eventual selling price,” says Grehan.
Vendors are particularly reluctant to admit to selling well below the asking price and their privacy has now been assured. Would-be buyers find it hard to commit to a purchase when there are no price comparisons in the area.
The differences between the two prices can be substantial. In the case of one Dublin southside semi, the price last summer was €2.4 million, while the sale price recently agreed was just under €1.5 million. A nearby house that started at €3 million eventually sold for less than €2 million, according to a source. These underline the deep discounts available.
“It is a big problem in the industry,” says Ed Carey, president of the Irish Auctioneers Valuers Institute (IAVI). “If sales prices cannot be disclosed, we are caught between a rock and a hard place. There does need to be a solution.” The institute’s own survey, published yesterday, and based on information from its 2,000 members, suggests that house prices could dip by a further 10 per cent in 2009.
But Grehan feels that in some cases, a major correction has already taken place. “As we enter the third year of the property downturn, there is a cohort of people who now appreciate the true extent of the correction and the opportunity this holds.” The agency has had a relatively busy start to the year. “We’ve had 405 viewings and 293 individual properties have been viewed. Twenty properties are sale agreed and a greater number of offers have been placed,” says Grehan who is cautiously optimistic for 2009.