House prices drop to 2002 levels after 14% fall last year

HOUSE PRICES have fallen back to 2002 levels, according to reports released yesterday.

The average asking price for a home nationally fell by between 12 and 14 per cent in 2010, according to property reports from websites MyHome.ie, Daft.ie and auctioneers Sherry FitzGerald.

All three reports found the rate of decline had slowed, but none predicted that the bottom of the market had yet been reached. However, real estate agents Savills said property in prime locations was unlikely to fall further.

Leitrim was the only county in the Republic where property prices did not fall last year, rising by 1.4 per cent in the last three months of 2010.

The average home has now dropped by between 35 and 48 per cent since the peak of the property boom, the reports found.

MyHome.ie’s latest property barometer found the average home now costs €217,000, over 13 per cent less than this time last year. Sherry FitzGerald put the national price drop at 12 per cent last year and Daft.ie said the drop was 14 per cent.

In Dublin, the fall in prices was greater. Homes in the capital lost between 12 and 15 per cent of their value in 2010 and values are now between 40 and 53 per cent weaker than at the peak, the reports said.

The average Dublin home now costs €317,000, down from €370,000 a year ago and €540,000 in 2006, MyHome.ie said.

Homes in Limerick city lost over 17 per cent of their value last year, while the figures for Cork and Galway were over 15 per cent and almost 13 per cent respectively.

The average three-bed semi-detached home dropped by 20 per cent in Meath, by over 18 per cent in Clare, and by more than 16 per cent in Wexford and Kilkenny.

The cheapest three-bedroom semi-detached properties were in Longford, with an average price of €155,000, and the most expensive in Dublin, at €295,000 on average.

Annette Hughes, director of DKM Economic Consultants for MyHome.ie, said that although prices were back to 2002, it was clear the bottom of the market had not yet been reached. Confidence remained weak, she said, but there was an overhang of potential buyers waiting to enter the market.

“The arguments supporting house purchases as a long-term investment decision may once again win out, particularly in good locations,” she said.

Not all parts of the country were adjusting at the same pace, Ronan Lyons, economist with Daft.ie, noted.

“It is the cities and in particular Dublin that are most likely to stabilise first, and it remains to be seen if this happens in 2011,” he said.

Marian Finnegan, chief economist with Sherry FitzGerald, said the significant reduction in stamp duty in the Budget was “undoubtedly good news for the property market”, but the greatest challenge would be the availability of credit.

Ronan O’Driscoll, head of residential at Savills, said three- to four-bedroom homes in traditionally well-located city areas were unlikely to fall further in price this year.