Irish house prices drop 1 percent in April versus March

Published 07th Jun 2011

The rate of decline in Irish house prices slowed in April compared to the previous month, data on Tuesday showed, but a recovery in property prices is not expected until Ireland's banking sector recovers.

Irish property prices have fallen for 41 straight months and are now 40 percent below a 2007 peak as a disastrous property bubble deflates, leaving the banking sector nursing huge losses and homeowners hefty mortgages.

Irish residential property prices fell 1 percent in April compared to a 1.7 percent drop in March, the smallest monthly fall so far this year, the Central Statistics Office said.

Dermot O'Leary, economist at Goodbody Stockbrokers, said the national average price for a house was 180,000 euros, back to levels seen in early 2002 and around five times average earnings.

"It is clear that an unprecedented correction has taken place, but until the banking sector shows real signs of rehabilitation, facilitated by the restructuring efforts currently ongoing, there is little reason to believe that prices will rise," O'Leary said.

Ireland's banks, faced with a fresh 24 billion euro bill to bolster their balance sheets, are focussed on raising capital and selling assets rather than expanding their mortgage books.

Tougher loan requirements together with the continued slide in property prices and a severe recession has also put consumers off buying property.

The drop in property prices has been most severe in Dublin, with apartments now costing less than half their price during the boom and houses in the capital 46 percent off their peak.

The fall in the price of residential properties outside the capital is just over 36 percent.

"On the evidence thus far and the fact that there is still a surplus of properties available outside of Dublin, residential prices outside the capital have further to fall," said O'Leary.

Overall in Ireland, house prices fell 12.2 percent in April on an annual basis, accelerating from March's annual drop of 11.9 percent and the fastest annual pace since June 2010.

A new house price series, based on transactions funded by residential mortgages from eight lenders and covering both houses and apartments, replaces the permanent tsb/ESRI index previously used as a benchmark by many economists, which has ceased publication.

Source: ' Reuters '

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