There have been a couple of reports this week on house and land prices for 2010. – Quarterly property barometer – Quarterly report

Sherry Fitzgerald – house price index

Indo Farming Supplement

If there is good news from these reports it’s that house and land prices did not fall as much in 2010 as they did in 2009.  That said, they did decline quite substantially.

With respect to house prices nationally, Daft, MyHome and Sherry Fitz all calculate Q4 declines:

Daft = -4.8%; MyHome = -3.2%, SF Q4 = -4.2%

Similarly, all three report 2010 declines in prices nationally of:

Daft = -14%; MyHome = – 13.1%, SF Q4 = -12.0%

Declines since the peak are estimated nationally as:

Daft = -40%; MyHome = – 34.6%,

with Dublin falls being substantially more:

Daft = -40.4% to -49.6%; MyHome = -36% to -48.9% depending on area in the city.

In general, there seems to be quite good alignment between the reports, although when compared at a county level there are some quite sizable differences between counties.  Leitrim is the one that stands out.  Daft report that house prices in the county declined by -13.4% in 2010, MyHome report that prices didn’t decline at all (0%) over the year, even rising in the final quarter.  Given the levels of oversupply and weak market in Leitrim it’s difficult to believe that house prices are stable in the county when they are falling everywhere else.

Sherry Fitz reported that 49.7% of all purchases were by first time buyers, and 27% of vendors were selling investment property.

Farm land prices nationally averaged €8,420 per acre, down €8,800 (-4.3%), slowing significantly from declines in 2008 and 2009.

As for what 2011 brings.  All predictions are for a further slippage in prices given the state of the economy overall and the surplus of overall stock (both new and secondhand).   The falls might though slow a little as stamp duty changes encourage people to re-enter the market to move up or down.  As Ronan Lyons notes in his analysis for Daft there are, however, significant regional variations now in housing market dynamics, with Dublin in particular operating in a different way to the rest of the country, and it may well be the case that house price falls will vary quite considerably across the state in 2011, especially if the sticky decline in rural areas speeds up.  MyHome‘s hope that there is an overhang of pent-up buyers waiting in the wings to come into the market once the house price trough is reached seems a little fanciful – this is the generation who are emigrating in droves, with substantial numbers on the Live Register, the need to build a large deposit, and difficulties in accessing mortgage credit.  I would think demand is pretty soft all round, and even if people moved out of rental accommodation into their own homes this creates an addition problem of further oversupply in the rental/investment sector and the potential to push that property onto the market.  The effects of the future property tax may also slow sales as people wait to find out what their commitment might be.  Overall, 2011 seems set to be another year of decline, but perhaps not as drastic as 2010 and certainly not as bad as 2009.

Rob Kitchin