There were double-takes all round last Monday when the Permanent tsb /ESRI house price index announced a 24% drop since February 2007 – a figure many believe to be conservative in the extreme.
It's difficult to find out exactly what a property sells for as, under the Data Protection Act, publication of selling prices is prohibited and information is therefore based on asking price. Those involved in the business believe a truer estimate of just how far property prices have plummeted is between 40% and 50%. And counting.
Ronan O'Driscoll, director of new homes at Savills, points to "the concrete example" of his own home. "I bought it for €1.9m in 2006, but one on the same road sold recently for around €850,000."
The new homes landscape has changed radically in ways other than price, he adds, saying that negotiating a deal on a brand-new property is now similar to a second-hand deal. But activity is scant in terms of brand-new launches and sales.
"There won't be any genuinely new launches for several years. Realistically, when is the next builder going to open up a new site to develop? What you will see are the next phases of existing developments coming up, perhaps with a name change."
With prices at near giveaway levels, Manor Park Homebuilders have taken that concept literally with a 'Win A Showhouse' competition. The prize is a new two-bedroom showhouse at Barnwell Hansfield, off the Ongar Road, near Blanchardstown shopping centre, Dublin 15. According to Manor Park MD John Moran, the value of the house is €250,000 and it comes fully fitted with everything. "It is ready to move into; just bring your toothbrush."
Ken McDonald says first-time buyers can find plenty of choice in the €200,000-€350,000 bracket. There is a lot of interest, even if not an equal number of transactions, suggests McDonald. "The autumn is not going to be spectacular, but our office was buoyed up throughout the summer with plenty of enquiries."
Among the schemes still attracting interest is the Herberton development, off South Circular Road, Dublin 8. With a location opposite a Luas stop and prices substantially reduced, buying an apartment might be a shrewd move for first-timers. One-beds are now priced from €175,000 and two-beds from €199,000 (reductions of up to €150,000 since the launch, says agent Hooke & MacDonald).
The same agent is jointly selling Wyckham Point in Dundrum with Sherry FitzGerald New Homes, recording 30 sales since May of two-beds priced from €339,000. Castlethorn Construction has launched the final phase of Belarmine, Stepaside, Dublin 18, offering apartments with prices from €175,000. The Gallery, Donabate, which was launched in June, has resulted in 25 sales. Two-bed apartments here are priced from €195,000.
Ivan Gaine, recently appointed director of new homes with Sherry FitzGerald, says those seeking a house rather than an apartment can buy a three-bed semi in the Holywell development in Kilcoole, priced from just €299,000. Three-bed houses in The Hastings, Balbriggan are priced from €169,000 through the same agent.
"There is strong activity for properties under €350,000, but there has also been a noticeable increase of inquiries for higher-end family homes, with a handful of deals at €1m-plus to include Claremount in Carrickmines and Farmleigh, Castleknock," he says. "Also in the pipeline is a development of family homes coming to the market over the next few weeks."
Jordan Auctioneers is handling enquiries for two different house styles, at reduced prices, at the Hawthorn Wood development in Suncroft village, Kildare. These large (2,500-3,000 sq ft) four- and five-bed houses are now priced from €450,000-€540,000.
According to Ronan O'Driscoll, the market for new homes has been tricky for much longer than many may realise. "It goes back much further than the start of the economic decline last September. The last really good sales month for us was back in July 2006. Builders are now offering property at near below construction prices. There is nowhere left to go," says O'Driscoll.
This article is typically of media,property developers,estate agents etc coming together to put on gloss on property.You state "give away" levels at Eur250k and "property at near below construction prices there is the nowhere else to go".Well Eur250k is an awful lot of money (8 times the average salary).Prices may be at or below construction costs but you fail to mention that those cost were way out of reality during the bubble years. As for Ronan ODriscoll I would tell him there is a place to go and thats bankruptcy.The era of cheap lending and house inflation is over for a generation.The game is up and its all downhill.Prices are heading to Eur100k and below for first time buyers.
Irish Life and Permanent is playing to its gallery of bondholders who are probably watching the Irish economy, property prices and employment collapsing in front of their very eyes.
What value has a 100% mortgage these days? Is it 50%? Or less with interest accrued....
With house prices at near or below construction costs, while prices may fall further in the short term they are bound to stabilize at or above current levels in the medium to long term. For a person who can afford a house now rather than an apartment, the risk of waiting outweighs the gain - maybe in 6 months time you'll only be able to get an apartment! Price is set by supply and demand. Demand is artifically supressed by the high levels of uncertainty about Nama and taxation, bank reluctance and lack of funds to lend, and media/public dissuasion like the previous two comments. If these change, which they will, what's likely to happen to prices?
Paul.Your'e either involved in property or you miss the point.Yes prices one day will stabilize but in Ireland's case at a far lower lever than construction costs.Supply and demand of money is the key and that has evaporated and will not come back due to the disasterous policies of your government.Wages are on the way down and so is lending.I agree with Anthony prices are heading sharply lower. No one in their right mind would want to purchase at todays levels. My own country Germany had its property bubble in the 70s and crash in the 80s.People lost a lot and values are still at 1989 levels.
You're grasping at straws Philip. I mean 2500000 euro for a poxey 3bed box in D15. This in a country where there are no jobs, no decent public transport, crap roads full of nutters on their phones while the brave Gardaci sit and watch too lazy to do anything about it. Top that with mass imigration which is only a trickle at present of whats to come. LOOK up the price of houses in the US AND Canada for the same price. Beautiful homes at fire sale prices plus fast and easy acess to freeways, schools, shoping etc, and no dog crap on the streets, litter bins that are emptied every couple of hours.Any one who lives in your old country are imprisoned for life as are yere poor ME ME ME kids. And who will invest in old Eire if Carroll wins his case. What message will that send to bankers Worldwide? If PADDY owes you 150,000,000 euro he doesnt have to pay you back on demand. How is it when all these rich dicks get caught they always seem to get sick . You and your scam artist buddies are finished Philo. The Irish Depression has not even started yet. That old box of a house isn't worth five bucks.
Beautiful day in Chicago today, ahh freedom
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House price falls have accelerated in May, June & July according to the PTSB-ESRI index (which is a lagging indicator by 4-5 months). The "trend is your friend" and price momentum is downwards still and will remain so for at least another 18-months. Ireland has yet to reach an inflection point; where we are building less than we're selling. New home completions for first 6-months of 2009 were > 14,000 homes or 550/week. Are the above estate agents selling 500+ new units per week?
These same agents just 1-year ago were preaching the 'Soft-Landing' scenario. History has been unkind to them. The head of Hooke & MacDonald 18-months ago on television went on record to say that the industry could turn-off the supply tap like the flick of a switch, yet the industry is still overbuilding in terms of the completion rate. Supply exceeds demand and 123,000 new homes have flooded the market since values began falling in April 2007. True, housing starts have virtually stopped, but it will be 2010 before we see a 'Bottom' in the new build rate with consensus estimates varying between 12,000 to 15,000 new homes (back to 1971 levels).
With regard to the elusive concept of 'Value' - what someone paid in the halcyon years is 100% irrelevant, accountants have a term for this: 'a sunk cost'. So if a person overpays for a property, say 2 million for a house that is now asking 850k, but was never worth more than half a million, there remains clearly a lot further to fall.
The sooner we get prices back to more realistic levels i.e. 3.5x to 4x average incomes (now still 6x, but was 10x at the bubble peak), the better.
It defies logic that persons employed in the auctioneering profession can boast about their longevity in an industry where they have persistently been upbeat on prices and recommending that "now is a good time to buy" (their motto and permanent creed), whilst simultaneously complain about vendor reality when it comes to price.
They are of course, an unregulated profession where the dictum "Caveat Emptor" resonates. To that end prospective buyers beware! A 2-bed in Dundrum for 339k, wait until its 280k, then 240k etc. Cigarettes come with a 'health warning', these guys should come with a different warning - listening to them and acting upon their advice could seriously damage your wealth!