Demand may revive house building

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House building may have to start again on a moderate scale as the supply of family homes for sale in urban areas falls, two new reports indicate.

The reports, from property websites myhome.ie and daft.ie, suggest two divergent markets are emerging: Dublin and the rest of the State.

Each website has collated asking prices for properties offered for sale between March and June. Though broadly similar in their findings, the websites' findings diverge markedly on trends in a number of counties.

Both find asking prices nationally continued to fall in the second quarter compared with the first, by 3.2 per cent on myhome.ieand by 2.6 per cent on daft.ie. The average asking price across the State was €212,000 on myhome.ie and €181,500 on daft.ie.

Ronan Lyons, economist with daft.ie, said that the Dublin market was closest to being a "normal" property market again. "The average asking price in Dublin in June (€214,000) was quite close to that in December (€217,000) while the average price outside the major cities fell from €162,000 to €149,000 in the same period," Mr Lyons said.

In her report for myhome.ie, economist Annette Hughes found increases in asking prices for houses in some parts of Dublin. "For example, Dublin city north and south, and Dublin county north, recorded increases of over 2 per cent." Her findings indicate the price of three-bed semidetached houses rose 0.4 per cent.

Both Ms Hughes and Mr Lyons noted the high proportion of apartments in Dublin and, as apartments have suffered high falls in value, this is keeping the average asking price of residential property down in the capital.

They both also pointed to increased activity in the Dublin market and, using activity as a measure of recovery, said the Dublin market is improving well.

"The stock available for sale in Dublin, at just over 4,600, has fallen 35 per cent from its peak of late 2008 and is only 18 per cent above the levels of early 2007," Mr Lyons said.

On daft.ie, 34 per cent of the properties that had been put on the market two months previously had sold, up from 25 per cent last December.

Ms Hughes said the average selling time for a Dublin property is five months, down from six at the start of the year.

Outside Dublin the market adjustment is far from complete. Prices are falling more sharply and oversupply remains an issue.

On daft.ie there are twice as many properties (16,000) outside Dublin for sale as there were in early in 2007 (8,000). Myhome.ie does not give this information.

Myhome.ie, which is owned by The Irish Times, looked specifically at asking prices for three-bed semidetached houses, considered the most popular family home. Nationally, the website found almost no change in the asking prices for this type of home, ranging from €100,000 in Co Longford to €149,000 in Co Cavan, €229,500 in Co Wicklow and €260,000 in Dublin.

Demand in urban areas will compound the supply differences between Dublin and rural counties, as people want to live near cities because that is where jobs are concentrated, said Mr Lyons.

"A large oversupply in some areas and in some property types, such as apartments and terraced homes, will only slowly fade away while urban areas may need construction of new family homes soon . . . Policymakers, both national and local, ignore them at their peril," he said.

The daft.ie report found asking prices fell in Limerick city (-3.9 per cent) and Clare (-2.8 per cent) in the second quarter of the year compared with the first. Asking prices fell sharply in Longford (-13 per cent) and throughout Connacht and Ulster.

Myhome.ie said prices rose 3 per cent in Clare and that there was no change in Longford. On daft.ie, asking prices rose 2 per cent in Leitrim and 10 per cent in Carlow, while on myhome.ie they fell 0.45 per cent in Leitrim and 6.7 per cent in Co Carlow.