Market hasn't hit bottom despite 40pc drop in four years, say economists...
HOUSE prices are likely to continue to fall for another two years, analysts predicted yesterday.
It came as a new, official index of residential property prices from the Central Statistics Office showed a 12pc fall in the past year.
It also found that the pace of decrease has picked up in the past two months
Prices are down 40pc from their peak level in 2007.
Dublin has suffered much higher losses in value, with the crash cutting prices almost in half. In the rest of the country they are down by a third.
The fall of 47pc in the capital contrasts with a plunge of 35pc elsewhere. Sharp drops in prices were recorded in February and March. The fall of 1.7pc in each month was the highest since July 2009.
However, these decreases mainly reflect sales agreed last November when the €85bn IMF/EU bailout was agreed.
The fact that the country was being bailed out meant that the only property transactions being completed at that time were distressed sales, analysts said.
The CSO index shows that in the year to March, house prices fell by 12pc countrywide.
This compared with an annual rate of decline of 11pc in February and a fall of 15pc recorded in the 12 months to March 2010.
In Dublin, residential property prices fell by 1.8pc in March, and were 13pc lower than this time last year.
Apartment prices have collapsed by half since the peak in early 2007, Economists warned that prices could continue to fall for another two years.
A lack of bank lending and high unemployment meant it could be two years before there is a pick-up, Bloxham Stockbrokers economist Alan McQuaid said. He predicted falls of another 8pc this year.
Economist Dermot O'Leary, of Goodbody Stockbrokers, said prices could plunge by up to 20pc outside Dublin. He said the price correction was almost complete in the capital.
Overall prices were likely to fall by between 55pc and 60pc before the market stabilised.
Mr O'Leary estimated that there were between 100,000 and 140,000 vacant homes .
The CSO defended its index, standing by its decision to only look at percentage declines, and not euro values.
It said actual euro prices were too unreliable.
The new monthly index has been criticised as it only covers prices for houses on which mortgages have been issued. Cash sales, which could account for up to four out of 10 sales, are excluded.
Yesterday, Permanent TSB and the Economic and Social Research Institute said they would no longer issue an index now that the CSO one is being published.
Report by Charlie Weston - Irish Independent