Price of average house fell €15,000 in first half of year

THE PRICE of the average home fell €15,000 in the first half of the year, according to figures published yesterday by the Economic and Social Research Institute (ESRI) and Permanent TSB.

National house prices fell by 5 per cent in the first half of 2008, with new houses and those in the commuter counties surrounding Dublin, as well as property in the Border and southwest regions, experiencing greater than average declines.

The latest edition of the Permanent TSB/ESRI house price index shows that the average price of a house in Ireland was €273,392 in June - a level that was last seen in November 2005. The authors of the report expect losses to continue through the remainder of 2008.

In June, the index recorded its 16th monthly fall when national prices fell back by 0.6 per cent. In the 12 months to June, prices declined by 9.7 per cent, accelerating on the annual decline of 9.5 per cent recorded in May.

From a peak of €311,100 in February 2007, prices have now fallen nationally by 12.1 per cent, or by more than €37,000, to a trough of €273,392 in June 2008. In Dublin, prices peaked in April 2007 at €429,800 and have since fallen back by 11.7 per cent, or by €50,073.

Niall O'Grady, general manager, business strategy, with Permanent TSB, said that declining consumer confidence was having a major impact on transaction levels, as "no one wants to buy at the top of the market".

Mr O'Grady said he expected prices to fall by about 9 per cent for the whole of 2008 and said a recovery in the market was predicated on three factors:

* good economic news;

* the return of liquidity on the international markets and

* European Central Bank rate decreases.

However, in a note to clients yesterday, Goodbody Stockbrokers said it expected prices to decline by 12 per cent in 2008. So far this year, the Dublin market is proving to be slightly more resilient than the rest of the State, with prices falling by 0.2 per cent in June and by 4.5 per cent in the six months to June, compared to price reductions of 0.8 per cent and 5.1 per cent recorded for the same periods for houses outside of Dublin.

This means the average price paid for a house in Dublin as of June 2008 was €379,727, while houses outside of Dublin were fetching €236,576. In the 12 months to June 2008, however, houses outside Dublin performed slightly better, falling by 8.3 per cent, as opposed to the price drop of 9.4 per cent in the capital.

Prices in the Border and southwest regions experienced the greatest reduction in the first half of the year, falling by 7 per cent and 6 per cent respectively, while prices in the commuter belt surrounding Dublin declined by 5.9 per cent or by €18,862, on average in the first six months of 2008.

New house prices declined by 1.3 per cent in June, bringing the six-month decline to 6.1 per cent, indicating an average price for a new house of €272,532 as of June.

Second-hand houses fell by 0.4 per cent and 3.9 per cent during the same period, down to €273,592 as of June.

Mr O'Grady said the sharper fall in the price of new houses, "reflects a more aggressive approach by developers in order to stimulate some market demand".