WHILE AFFORDABILITY HAS returned to the Irish housing market, property prices are still not showing signs of stabilisation and are likely continue to decline throughout 2012, according to Davy Stockbrokers.
The “true peak-to-trough decline” in the Irish property market exceeds the 48 per cent indicated by the CSO index, the stockbroker claimed, due to a lack of cash transactions in the official measure.
Davy said that house prices have fallen about 55 per cent from the peak, and will continue to decline until they are 65-70 per cent below prices seen during the boom.
The report said the ratio of house prices relative to disposable income has fallen to 3.8 – a similar level to the mid-1990s – and that the Irish ratio compares favourably with the UK, where ratio is currently 5.1.
However, Davy said that several factors indicate that prices will continue to fall, including:
- Constrained bank lending
- Uncertainty about economic prospects
- Emigration and demographic factors that will push down on household formation
- An excess supply of vacant housing units
A Goodbody report on residential property prices released this week claimed that the value of the average Irish home has fallen by considerably more in the last few years than had previously been suggested – down by over 60 per cent from their peak value.