Dublin house prices fall 42pc from peak

The national average asking price for a house at the end of 2009 was €242,000 - a fall of €107,000 from the peak.

Dublin city centre has been the worst hit area during the housing market downturn and this was again evident in the Daft.ie report, with asking prices in the fourth quarter of last year down 42.5pc from their peak.

All areas of the capital saw sizeable falls. While north Co Dublin was the least affected area, house prices there are still down close to 31pc from the peak in early 2007.

Meanwhile, in Cork, Galway and Waterford, asking prices fell by approximately 30pc.

In Limerick, drops were on average 25pc, while elsewhere in the country prices are now on average 30pc below their peak in early 2007.

Highlighting the link between price falls and movement on the market, Daft.ie economist Ronan Lyons said: “Over the course of 2009, Dublin saw the largest fall in asking prices, as sellers adjusted to market conditions. At the same time, the total stock for sale in the capital fell by almost 20pc over the year.

“In other parts of the country however, where there have been significantly smaller falls in asking prices, the number of properties available for sale is still rising,” Lyons added.

Affordability offers little comfort without credit
“Although houses have in general become more affordable in terms of price, this is of little comfort to potential purchasers if credit is still very tight,” said Alan McQuaid, Chief Economist, Bloxham Stockbrokers, commenting on the report.

“As such, it is therefore imperative that the country's banking system is put back on a sound footing as soon as possible. This must be the Government's main objective for 2010,” he added.

Seeds of comfort
According to McQuaid, there are some seeds of comfort contained in the Daft.ie report, with the average time to sell a property falling from the previous quarter. The typical Dublin property is now taking about four months to sell, compared to seven months elsewhere in Leinster and more than nine months in other parts of the country.

Expect further house price falls in 2010
McQuaid predicted that the Irish economy will see positive year-on-year growth in the second half of 2010, and that may result in a slight increase in house prices towards the latter part of the year.

“However, in overall terms, I would expect house prices to drop another 10-15pc on average this year, with Dublin again seeing the biggest decline. But as prices start to recover, Dublin should see larger gains than elsewhere, though the major cities should quickly follow the upward trend of the capital.

“Looking further ahead, I expect house prices to be higher on average in 2011 than in 2010, and should rise on a five-year v iew as the labour market returns to normal,” he added.

“That said, the level of any increase in house prices over the next few years is likely to be only in single digits, with three factors - the banks' adoption of a more cautious stance to lending than in the 'Celtic Tiger' era, the return of interest rates to 'normal' and the possible introduction of a property tax for 'principal' homes of residence - all weighing negatively on the market," McQuaid warned.