The average price of new homes across the country has now fallen by 40 per cent from its 2007 peak and may have reached the bottom of the current downward cycle, according to The Irish Home Builders’ Association (IHBA).
The IHBA, which represents nearly 1,500 house building firms, said the level of unsold housing stock is being exaggerated and the number of unsold houses in Dublin and the Greater Dublin Area represents less than 8 months supply in more normalised market conditions.
The IHBA’s Property Market Review and Outlook 2009 report, published today, also said that houses were now available for sale at prices below what it would cost to build a replacement property.
The association said most commentators, including the Economic and Social Research Institute (ESRI) and Allied Irish Bank, believed that the peak to trough fall in house prices in Ireland will be of the order of 40 per cent.
According to the overwhelmingly majority of its members, which it said build most of the private multi-unit residential developments, reductions of this magnitude have already occurred.
The IHBA chairman Dominic Doheny said: “Current prices are not sustainable in the medium- and long-run.”
“Companies will not resume building new houses or apartments until market prices reflect all cost inputs and a reasonable return for the investment, that is, a greater return than available in relation to a less risky investment.
Whilst this may not be an issue for the market at present, the complete halt in residential construction activity in our main urban areas is likely to lead to supply pressures in certain markets within a relative short period of time,” he said.