House prices fell 6.8% in 2007 - report

House prices continued to fall in the final months of 2007, new data from estate agent Sherry FitzGerald has indicated.

According to its report, the average price of a second-hand property in Ireland fell 2.4 per cent during the final quarter of 2007, bringing the total for the year to a decrease of 6.8 per cent.

Excluding the Dublin market, the fall in prices was 2.1 per cent during the final quarter, and 3.1 per cent for the year.

In the Dublin market, property prices fell 2.7 per cent during the quarter, with a final reduction of 9.9 per cent for the year. Elsewhere, Cork prices slipped 2.3 per cent for the quarter, and 4.5 per cent for the year.

"The Irish and in particular the Dublin property market was negatively impacted by the erosion of consumer confidence in the performance of the market. This began somewhat notoriously with the furore about stamp duty in autumn 2006 and was augmented by the rising interest rate environment and the tightening of the financial sectors policy in relation to bridging finance," said Marian Finnegan, chief economist, Sherry FitzGerald Group.

She said that the abolition of stamp duty for first time buyers in June alleviated this downward trend, but the expectation of further changes in the coming months meant that the market failed to rebound to any significant degree. However, the latest changes to stamp duty are expected to bring market activity back to normal.

First-time buyers accounted for 36 per cent of the estate agent's sales of second-hand homes, while investors bought 16 per cent.

Describing 2007 as a "challenging" year, Ms Finnegan said the outlook for 2008 was brighter, but that she did not expect prices to revive immediately.