House prices in Dublin fall 10% in first quarter

HOUSES IN Dublin lost more of their value in the first three months of the year than those in the rest of the Republic, the latest figures show.

The Permanent TSB/Economic and Social Research Institute (ESRI) house price index shows that prices in Dublin fell by 10.3 per cent in the first quarter of 2010 compared to 3.5 per cent outside the capital.

Over the 12 months to the end of March, the decline in Dublin was 24.5 per cent, and compared to a fall of 23.4 per cent in 2009. The average price for a Dublin house at the end of March was €250,872, compared with €279,753 at the end of 2009.

Outside Dublin, the average price of a house at the end of the first quarter of the year was €183,309, compared with €189,924 during the last quarter of 2009.

Niall O’Grady, Permanent TSB’s general manager for business strategy, said yesterday that the steep fall in Dublin prices during the first quarter reflects the fact that values in the capital rose more quickly than in the rest of the Republic during the boom.

He added that Dublin also has proportionately more investment properties and is suffering disproportionately because investors have left the market.

A third factor behind the decline in house prices in the capital is that the city has more homes in the €1 million-plus bracket, many of which on the market are proving hardest to sell.

The average fall across the State was 4.8 per cent in the first three months of the year. Mr O’Grady said that in the 12 months to the end of March, prices fell by almost 19 per cent.

He added that said despite some predictions of a slight recovery, there is little prospect of this before 2011.

Permanent TSB, which is the biggest mortgage lender in the State, and the ESRI originally predicted that prices would fall by between 40 per cent and 45 per cent from the peak they reached in early 2007.

The two organisations are sticking by that forecast, according to Mr O’Grady. He said that prices had fallen by about 34 per cent or 35 per cent from the highest point and added that the market faced further declines of 5 per cent to 8 per cent of peak prices.

In real terms, this translates as a fall from current levels of 8 per cent to 12 per cent.