Irish property boom comes to an end

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Taken from the Uk Times

Ireland's phenomenal house-price growth simply could not continue. Until 2007 national house prices had risen by an average of 15 per cent every year for a decade, with the average house price rising from €75,000 (£56,000) in 1996 to €310,000 in December 2006.

Last year the impact of heavy price falls in the capital were felt around the country, with prices falling by an average of 6.4 per cent. Stephen Jeffery, who covers southwest Ireland for the property search company The Property Finders, says: “Rates rose seven times last year, so they are now nearly 2 per cent higher. We have moved from a buyer's to a seller's market. Realistically, agents should be pricing around 12 per cent below the peak of 2006.” Buyers and sellers have reached a stalemate, and few deals are being done. “Co Cork auctioneers are feeling the pinch,” Jeffery says. “Sales are down about 60 per cent on 2006.”

Not all types of property are suffering equally. “Country houses and period properties with a bit of land continue to sell well,” says Robert Ganly, of Knight Frank. The agricultural market is also holding up well, although new housing is suffering, “especially in less prime locations”, Ganly says. Worst affected, Jeffery says, are houses worth €500,000 or more. “Modern four and five-bed detached properties will not sell if they are not priced correctly,” he says. “There is a stockpile of hundreds of these properties for sale across the country.”

There has also been extraordinary house-price growth in Northern Ireland and, as with the Republic, the boom is now over. The University of Ulster house-price index shows that average prices fell 8 per cent, from £250,000 to £230,000, over the 18 months from the summer of 2006 to the end of last year. “We had been through an extraordinary period of growth,” says Alan Bridle, chief economist at the Bank of Ireland. Indeed, five of the ten counties with the highest house-price growth in the UK over the past decade are in Northern Ireland: Co Armagh tops the pile with more than threefold growth. “This had taken average prices way out of line with incomes and with the economic fundamentals,” Bridle says.


In part, Northern Ireland's housing boom can be explained by its need to catch up with the rest of the UK. Its new-found political stability meant that it suddenly appeared a much more attractive place in which to buy a home. Local investors were quick to move in. “Most of the original investment money was local,” Bridle says. “There is a small but very wealthy base of professional landlords.” Money has also poured into Northern Ireland from the Republic and the rest of the UK. Amateur investors in property in Northern Ireland, many of whom bought as recently as last year and borrowed heavily, look among the most vulnerable property owners in the UK.

As in the Republic, the Northern Ireland market has slowed dramatically, with the volume of transactions falling by roughly a third on the same period last year. “There is still too much of an affordability gap for first-time buyers,” Bridle says. “But as this year progresses I think we will start to see them coming back into the market.”


http://property.timesonline.co.uk/tol/life_and_style/property/article3453330.ece