Second-hand house prices drop

Victor

From the Irish Times / ireland.com

http://www.ireland.com/newspaper/finance/2002/0104/851325955BWPG2CAPBW04HOUSEBWHO.html

Please note. I still consider house / apartment prices over valued and that a 4% drop affects very few people in real terms. Few (if any) will end up with negative equity (a mortgage higher than the value of their house) as a result. Many people have paid off their mortgage or bought at a time when prices were much lower that current (and recent) prices and are still sitting on a (mostly tax-free) profit.

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Second-hand house prices drop by more than 4%
By Mary Canniffe

HOUSING: Second-hand house prices fell by 4.63 per cent in 2001, according to estate agents Sherry FitzGerald's All-Ireland Price Barometer. In the Dublin area, the average price of second-hand houses fell by just under 6 per cent.

Based on a basket of second-hand house sales handled by Sherry FitzGerald offices, the figures for the Dublin market show a 2.1 per cent fall in average prices in the last quarter of 2001.

Average Dublin prices fell by 4 per cent in the third quarter and by 1 per cent in the second quarter, after rising by 1.3 per cent in the first three months of the year.

Figures for the whole State are produced on a half-year basis. They show prices fell by 4.56 per cent in the second half of 2001 after a fall of 0.7 per cent in the first half.

The 6 per cent fall in Dublin prices in 2001 followed an average price rise of 16.4 per cent reported by the estate agents for 2000.

Forecasting that property markets would start to stabilise in coming months and could improve gradually in the second half of the year, company economist Ms Marian Finnegan blamed the Government for the price fall in 2001.

"The results of the barometer reflect the impact of a loss of consumer confidence, which was instigated by significant and miscalculated Government intervention in the market over the past three years," she maintained.

She suggested the pace of rental inflation was further evidence that Government intervention had been misguided. This intervention started with the removal of mortgage interest relief for investors after the first Bacon report in April 1998, and was compounded with the imposition of a 9 per cent stamp duty rate that drove investors out of the market, she said.

Welcoming the reintroduction of mortgage interest relief and the amendment of stamp duty announced in the 2002 Budget, she said these measures should help to increase the supply of investment property, which in turn should reduce the pressure of rental prices over time.

It was too early yet to see any impact from the Budget measures, she said, because estate agents were open for only about a week after the measures were announced prior to closing for the Christmas period. In that week, her company saw an increase in the numbers viewing properties - but there was no impact on property traded or on prices, she said.

However, Ms Finnegan said there was no likelihood of a return to the 1990s price inflation of 25 per cent-plus, and that any increase this year should be modest.