The latest House Price Index, brought to us courtesy of Permanent TSB and the ESRI, confirms the stagnation that people in the West Cork property scene have been feeling in their bones for the last 9 months or so.
The latest figures run up to July of this year and show that the average house price in the Republic is currently at €301,267. This is a startingly accurate figure and what’s even more interesting is that it’s virtually the exact same figure as the average price from June 2006.
So, not much happening then? Well, as always, there is something happening to the market, which like all organic things, is never in a state of complete stagnation: At the moment, house prices are slipping ever so slowly. In fact, the rate of slippage has slowed slightly from 0.5% in June to 0.4% in July. Since the start of the year, house prices nationally have declined by 3%.
So, where to next for the housing market in Ireland? The answer is never straightforward, which is what makes the property market – and life in general – so interesting.
While property prices in West Cork have been on the slow decrease like everywhere else, the decreases have been concentrated in certain sectors: the new housing estate market, for example and the small townhouse/investor type of property. This is a reflection of two things: the overall lack of confidence in the marketplace and the abolition of stamp duty for first-time buyers on all 2nd-hand homes (which has made brand new houses for first-time buyers less of a unique attraction). Meanwhile, the 2nd-hand home sector isn’t feeling the pinch quite as much, if at all. Another catalyst in all of this has been the continuing rise of interest rates.
There hasn’t been an interest rate rise in a number of months now, and there a lot of indicators out there to suggest that there won’t be any more significant rises for a long time to come. Nobody in Europe wants them. Even France’s new president Nicolas Sarkozy has been publicly calling on his fellow countryman and ECB chairman J-Claude Trichet to stop it with the interest rate rises, for God’s sake.
The longer interest rates remain un-raised, the more confidence will creep back into the marketplace. One must remember that Ireland’s position is not unique and that virtually all markets across Europe are experiencing similar stagnation/decline. In Ireland, the level of house production has fallen sharply (scared speculators and even more scared bankers) from an estimate 90,000/year to about 60,000/year. With an economy that’s continuing to grow and its population along with it, this very fact could cause house prices to start crawling up the graph in another 9-12 months time. Watch this space…