Bleak outlook in Dublin property market

THE latest property market reports for Dublin show the
continuing fall in prices shows no sign of abating.

Asking prices across the city fell by an average of
almost nine per cent in the final three months of 2011, compared to a fall of
4.5 per cent between June and September according to the Daft.ie House Price
Report for the final three months of last year.

The average asking price for a residential unit in
Dublin is now

?¬217,000, down from a peak of

?¬483,000 in early 2007.

The latest figures show that the percentage fall in
asking prices for Northside properties from the peak is 56 per cent. Prices in
North County Dublin have dropped by 51 per cent and in Dublin City Centre by
61.2 per cent since early 2007.

However, economist with Daft.ie Ronan Lyons believes
the drop in prices may actually be a positive sign.

“It’s tempting to see larger house price falls as a
bad thing and no doubt many, particularly those in negative equity, will see
this dramatic fall in those terms,

? he said.

“However, if the size of the correction in house
prices is determined by fundamental factors, then it is better for the prices
to race to the finishing line than crawl there.

“Looking ahead to 2012, confidence and finance are
central. It is vital to remember that recovery in the property market does not
mean an increase in prices, it means an increase in transactions.

“This is ultimately down to the banks, who will not
resume lending until the Government’s stress tests stop punishing them for
doing so.

?

According to Daft.ie the total number of properties
for sale in the capital, 5,700, is well below the peak of 7,100 but above the
figure for early 2010 (5,300).

About half of properties listed in Dublin sell within
five months while the other half struggle to find buyers.

Meanwhile, property website MyHome.ie put the annual
rate of decline in the capital for 2011 at 14.7 per cent with asking prices
halved since the peak.

Based on average mix-adjusted asking prices, MyHome.ie
put the average price for a home at

?¬268,000 compared to

?¬275,000 at the end of
last summer.

Author of the Myhome.ie report, Annette Hughes,
Director DKM Economic Consultants, said the economy remains in a fragile
position and that prospects for economic growth in 2012 remain uncertain.

“House prices will not stabilise until we have a
period of sustained economic and employment growth,

? she said.

“Right now the on-going debt crisis in Europe combined
with less than encouraging news on the international economic front as well as
the fiscal consolidation programme underway means the likelihood of an
acceleration in economic growth in 2012 is questionable.

?

Ms Hughes pointed out that while many households are
likely to be worse off in 2012, there was good news for first-time buyers in
the December Budget.

“Several positive measures were announced in the
Budget to help the residential property market and stimulate transactions,

? she
continued.

“However if they are to work the market will require a
considerable improvement in the supply of mortgage credit for potential buyers
during 2012.

“It will also require evidence of some stability in
house prices over a sustained period and this remains dependent on employment
growth.

?

Director of MyHome.ie, Angela Keegan, said the
measures announced in the Budget, the prospect of lower interest rates, the
very modest fall in the price of new homes, indications that credit may be more
accessible this year and increasing signs of price stability in the three and
four bed semi-d market were all positives which could be built on in 2012.

“We estimate transaction prices nationally are down at
levels last seen ten years ago while in Dublin they are back at 2000 levels,

?
she added.

“So affordability continues to improve all the time. There were a
lot of positives in the budget for first time buyers, particularly with regard
to mortgage interest relief.

“A lot of the uncertainty which was out there before
the budget has been removed. Unfortunately uncertainty over the future of the
euro and economic growth remains and this continues to sap consumer
confidence.

?