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Thursday, 31 July 2008

Ireland Property Bubble - House Price Bubble Has Burst - Daft Property Ireland

Property prices fall further as Dublin second-hand homes drop by 10.4%...

THE AVERAGE cost of a new house was just over 3 per cent lower in the first three months of this year than in the same period last year, according to new figures from the Department of the Environment.

Prices of second-hand houses suffered a sharper fall of 5.4 per cent, but the greatest decline was in the price of second-hand houses in Dublin which were 10.4 per cent lower in the first quarter of the year than in the same period of 2007.

The price of new houses in the capital fell by 4.8 per cent...

The department's housing statistics show a steady increase in the provision of social and affordable housing, but very steep declines in the total numbers of houses built and started in the first three months of the year.

Just over 14,000 houses were completed, a decline of 30 per cent on the first quarter of 2007. The number of houses on which construction began was even more dramatically reduced. There were just 7,713 residential commencements fewer than half the number on which construction began in the first quarter of 2007.

A substantially lower number of mortgages taken out on houses corresponds to the reduction in house completions. Banks and building societies approved 15,358 loans in the first quarter, a reduction of 37.6 per cent. The total value of these loans was €4,418.8 million, a 31.5 per cent drop on the first quarter of 2007.

While residential construction has slowed substantially since early 2007, the social and affordable sector underwent something of a boom in the first few months of this year. A total of 976 affordable housing units were provided through all affordable housing schemes in the first quarter of 2008, double last year's first-quarter figure.

The breakdown of these numbers shows that just 135 of these houses were built on State or local authority lands and 87 were provided through the Affordable Homes Partnership. The remaining units were provided through the Part V scheme.

This scheme requires developers to allocate 20 per cent of units in estates or apartment complexes for social and affordable housing. Local authorities can accept cash from builders in lieu of these houses, however the Department of the Environment has for a number of years said that it would prefer local authorities to take houses or land rather than money.

Dublin City Council has already adopted a policy of not taking developers' money in lieu of houses, and this policy appears to be filtering through to other local authorities. While the number of new houses finished was significantly lower than in the first three months of 2007, the number of Part V homes provided was up 73 per cent.

Just 24 people bought houses in the first quarter of 2008 through the Shared Ownership Scheme, whereby those on low incomes can buy a house through paying a reduced mortgage and rent to their local authority.

2008: first quarter

New house prices

Average price:
National €311,113;
Dublin €397,696;
National -3.1 per cent lower than the same period in 2007;
Dublin -4.8 per cent.


Second-hand prices

Average price:
National €359,277;
Dublin €462,475;
National -5.4 per cent;
Dublin -10.4 per cent.



It's a house price bubble that has burst. But there's still room for a lot more price reductions before we will see anything we can call a "bargain."

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