House price decline slows for first time in seven months

RESIDENTIAL PROPERTY prices fell further in the year to the end of March, but the pace of decline slowed for the first time in seven months, according to new data published yesterday.

According to the Central Statistics Office, prices for homes fell by an average of 16.3 per cent on an annual basis last month, compared with 17.8 per cent in the year to the end of February.

However, on a monthly basis, there was no change compared with February. The last time there was a halt in monthly price declines was August 2010.

“While these figures are undoubtedly positive in the context of accelerating price falls since late 2010, it is worth noting that monthly price data can be volatile, particularly as the data is restricted to mortgage transactions and prices have still fallen 4.1 per cent in the first quarter,” Glas Securities said in a note.

“Nevertheless, today’s release will be welcomed given the high levels of negative equity and mortgage arrears in the Irish banking system and forthcoming price data will be closely monitored to establish if these figures mark the early stages of a stabilisation in property prices.”

In Dublin, property prices were 0.7 per cent higher in March, but remained 18.3 per cent lower than in March 2011. House prices in the capital were 18.4 per cent lower compared to a year earlier, and showed a 0.7 per cent rise month on month.

Prices for apartments were 18.9 per cent lower over the year.

Overall, property prices in the capital have fallen 57 per cent from their peak level in early 2007.

Apartments have declined most, falling by 61 per cent, while house prices have lost 55 per cent of their value.

In the rest of the country, residential property prices were 0.6 per cent lower last month, and 15.5 per cent lower over the year. Since the peak of the property market, home prices have fallen by 45 per cent.

According to Central Statistics Office figures, which do not take into account cash sales, the national index of house prices is now 49 per cent lower than its highest level in 2007.

Bloxham’s Alan McQuaid said the March figures were an improvement on the previous two-month period, and offered signs of encouragement that the annual rate of decline has stabilised.

However, he said, there was unlikely to be a significant improvement to the market until the employment situation improved.

“Irish consumers will want to see the housing market stabilising before they feel confident about the economy overall. Even allowing for the Budget 2012 initiatives to boost the property market, as well as lower interest rates from the European Central Bank, the short-term risks to house prices remain to the downside in our view,” he said.

“Although the March data are a step in the right direction we don’t see any significant improvement in the housing market until the employment situation gets better and bank lending returns to some sort of ‘normality’, which is still some way off in our opinion.”

Bloxham is predicting a double-digit decline in house prices for the year, in the region of 15 per cent.