AN “ONGOING mismatch” between supply and demand in the housing market pushed asking prices down 3.1 per cent in the first three months of the year, according to the latest report by housing website Daft.ie.
According to Daft’s House Price Report, the average national asking price for property has fallen 43 per cent since the peak of the market and now stands at €210,000.
Another study published today by DKM Economic Consultants on behalf of MyHome.ie places the average national asking price at €260,000. It says prices are down 4.1 per cent on a quarterly basis, with the market enduring a drop of 37 per cent nationally since its peak, and 43 per cent in Dublin.
Both reports agree that it remains a buyer’s market.
The average time it took to sell a property in the first quarter of 2011 was nine months, the same as a year ago, according to Daft. The average time in Dublin was five months, down only slightly year-on-year.
The MyHome.ie Property Barometer said the average time it takes for a property to go sale agreed varied from three months in Dublin to 13 months in Connacht and Ulster.
“An ongoing mismatch between supply and demand is pushing prices further down,” said Ronan Lyons, economist at Daft.
“Prospective buyers find it difficult to get the finance, while owner-occupiers are often restricted by negative equity. As a result, the market is moving very slowly.”
Of the 3,000 properties posted for sale on Daft.ie at the start of 2010, one in three is still for sale 15 months later, Mr Lyons added. In Dublin, however, the figure is closer to one in six.
In an article accompanying the Daft report, Eoin Fahy, chief economist at Kleinwort Benson Investments, said a “first wave” of house price falls had resulted from bubble prices, unemployment and the tighter supply of credit.
A “new set of problems” may now be on the way, he said. “A second wave of factors may keep downward pressure on house prices.
“This will be mainly due to higher interest rates, but there is also an outside risk to house prices from repossessions and even from strategic default.”
In a strategic default, borrowers have such a negative view of the future “that even those that can pay, don’t pay, as they can’t see why they should pay their mortgages each month when so many others will not”, Mr Fahy writes.
While the Daft report finds quarterly price falls both across the State and in each region of Dublin, the MyHome report suggests that prices are rising in the south part of the city centre, with only modest declines in the west and south of the county.
“The moderating pace of price decline in Dublin is to be welcomed, as is the fact that affordability continues to improve,” said the report’s author, DKM director Annette Hughes.
“The median asking price for a 3-bed semi ranges from €149,000 in Longford to €285,000 in Dublin. The national figure is now €179,000, which is equivalent to around five times’ average earnings,” Ms Hughes said.
Further price drops are likely over the course of 2011, she added, partly as a result of impending interest rate hikes.
The European Central Bank has signalled that it will increase rates as early as the meeting of its governing council this Thursday.
MyHome.ie managing director Angela Keegan said the figures indicated 2011 is going to be another challenging year.
“While the stamp duty changes have attracted trader-uppers back into the market, first-time buyers face some difficult choices,” she said. “They will have to weigh up the fact that prices may fall further with changes in mortgage interest relief which it appears now will be introduced at the end of the year.”
