Lack of data is making it tough for buyers and sellers, says SIMON ENSON

THE PAST 12 months have, without doubt, been the most challenging period ever experienced in the Irish housing market. A combination of unprecedented global and domestic economic challenges has created a situation in which people cannot, or will not, buy.

The result has been almost complete stagnation of market activity in what had once been the most vibrant sector of the Irish economy.

Basically, the landscape has dramatically changed. Selling property nowadays is not for the faint-hearted. Sellers need to have a well thought out strategy if they want to get a result. For example, if they decide they want to trade up, they have to know what their house is actually worth, and factor in the time it will take to sell. In the old days, it could have been done and dusted in a matter of weeks. Now transactions are taking a lot longer.

That said, this summer did bring a little reprieve. The first positive signs emerged in the opening months of the year with a steady increase in viewing levels. This gradually translated into an uplift in transactions.

The combination of this and the limited supply of new properties coming on the market, particularly in Dublin, has resulted in a reduction in the supply of second-hand stock available.

Our research is showing that, in the greater Dublin area, the stock of houses has dropped by 46 per cent approximately when compared with that available in the first half of 2008.

As such the emerging evidence appears to suggest that the property market is showing signs of stabilising. The correction in prices has been quite aggressive with properties today typically selling for around 40 per cent – and in some cases as much as 50 per cent – less than they would have achieved at the peak of the market in mid 2006.

We have been able to track this with sales results of similar, adjoining houses on the same street, say where one was sold in 2006 and one in 2009. Or where the same house has been sold twice in recent years.

The top end of the market has been worst affected, and that is where the banks are queering the pitch to a greater extent.

None of the above is news to anyone operating in the industry.

This is our bread and butter but for many outside the industry – potential buyers and sellers – such information is almost impossible to find and certainly impossible to verify.

In a time when information on anything is available in seconds – through search engines like Google – simple information on the price that houses are selling for in our own neighbourhoods is either not available at all or only through word of mouth.

This is in sharp contrast with our near neighbours, the UK, where all data on house transactions is recorded and instantly available to the general public. We in Ireland have taken a much more conservative approach to such data.

The Data Protection Act insists that, for a sales result to be published, the consent of both the vendor and purchaser must be obtained in writing. In reality, this is very difficult to achieve as there is no incentive for either party to give such consent. As such asking prices are effectively the only publicly available data on residential property transactions and, given the market correction, they often bear little resemblance to the prices achieved.

Because of the lack of information, buyers are making judgements based on hearsay and rumour. We’ve seen plenty of situations where would-be buyers insist they won’t pay a penny over such-and-such an amount that a nearby house made, whereas in fact we know, because we sold it, that the nearby house made more than they think. There is no way of giving these buyers the full picture, without breaching the Act.

A register of property transactions akin to that in the UK would benefit all. Sellers and purchasers could verify the advice they are receiving from their estate agent and satisfy themselves that they are making the right decision.

Economists and other researchers would have access to much improved data on the property market which would facilitate a more satisfying debate on the market’s performance. It would be a win-win for all involved and, while it is often easier to do nothing in the face of a challenge, in this instance doing nothing is not an option for our legislators.

Now, more than at any point in our past, we need to know exactly what is happening in this vital sector of our economy. Inaction is not an option.

Simon Ensor is chairman, Sherry FitzGerald Residential, and is a spokesperson on the residential market for the Irish Auctioneers Valuers Institute