Clare house prices on the slippery slope

House prices in Clare plummeted in the last quarter of 2012 by between 10% and 16%, according to new reports out this week. The percentage fall in asking prices for three-bedroom semi-detached properties here was the second highest in the country.
The MyHome.ie Property Barometer shows that the price of a four-bedroom semi-detached home in the county during the last quarter of 2012 dropped more than 11% compared to the same period in 2011, but was up 3.3% compared to the third quarter of the year. It states the median asking price for these homes in Clare is now €155,000, the lowest in Munster.
The MyHome.ie report shows the median price of a three-bedroom semi-detached home in the county is now €125,000, down 10.4% from the previous quarter and 53.2% from the peak. Three-bedroom homes in Clare are now the sixth lowest priced in the country.
The county experienced the second largest drop in asking price for this type of property, with Limerick down just 3.1%, Galway and Waterford remaining static, Tipperary down 4.7%, Kerry down 5.2% and Cork down 2.2% in the same period.
The report also notes that the average time it takes a property to go sale agreed in Munster is now 10.5 months, longer than all other areas.
The barometer shows that cash transactions accounted for 46% of the market last year, up from 39% the previous year and 12% in 2010.
Another report released this week states that the average price of a home in Clare is now €144,043, down more than 15% since last year. According to this report the average asking price for one-bedroom properties in Clare is just short of €60,000. Prices for two-bed properties in Clare are on average €76,629. Three bedroom homes in the last quarter were averaging at €95,701, while four bedroom houses and five-bedroom properties were being offered at €142,958 and €161,936 respectively.
The Daft.ie report states that the asking prices of homes in Clare is now down 53.4% from the peak.

Diarmuid McMahon, managing director of Sherry FitzGerald McMahon, which operates throughout Clare, believes house prices here will only stabilise after they have done so in Dublin.
“Sherry Fitzgerald Group’s chief economist, Marian Finnegan said 2012 “was a turning point for the housing market” noting, “after five consecutive years of contracting prices, the average price of a property in Dublin rose, albeit by a moderate 1.5%. The rest of the country has also benefitted from greater stability with prices in Ireland falling by 3.3% in 2012, compared to a fall of 16.2% in 2011.”
The MyHome.ie report notes that confidence in the market will be tapered by the introduction of a property tax, the removal of mortgage interest relief for first-time buyers and the prospect of another austerity budget in 2013, all of which could deter those thinking of buying.
However, Mr McMahon said those thinking of buying in the coming year will buy if they find the right type of property.
“If you are buying a property below construction cost and you can find the type of property you want, rather than getting the last ounce out of the property price drop, you are going to buy. The Budget has brought clarity to first-time buyers. In the run-up to the Budget, people didn’t know where they stood and now they have clarity. We have gone through three or four of those budgets now, we have as much certainty as we have had in recent years. The Budget is done with, so any incentives that were there are gone now so they are not really part of the purchasing decision today. Those buying can’t lament the passing of those things, they are not coming back. People buying now have excellent value – in some cases, homes being offered below construction cost, so there hasn’t been a better time to buy in the last 10 to 15 years.”
The MyHome.ie barometer pointed to a significant gap between buyers’ and sellers’ expectations in some counties. In Clare, the difference between asking prices and prices achieved is about 60%.
Mr McMahon said he believed the Property Price Register, which was introduced this year, has brought “clarity” to buyers and sellers.
“It has given people more clarity to know what is happening in the market and, statistically, it is incredibly important. Before this, you were always depending on the asking prices advertised on websites like Daft.ie and MyHome.ie and the CSO figures. The problem with the CSO figures though is that they were based on mortgage draw-downs and we see that last year, 46% of all purchases were cash so you were getting figures and drawing conclusions ignoring nearly half the market. So finally there is some clarity in what is happening in the market.”
He also noted the prices of new houses listed on the Property Price Register can be misleading because they, unlike the second-hand properties, are listed exclusive of tax.
“A lot of homes being sold around the county are being sold below construction cost. So prices will have to increase a lot before construction can go up again. When you get to the bottom of the market, it is not a place that would entice a vendor to the market. People thinking of selling might look at the market right now and say ‘well things won’t get much worse in the next year but they might get better’. So vendors are holding back from the market because they felt ‘I might as well wait for 12 or 24 months because I have nothing left to lose’. That is, in turn, contracting the market.
“The result of this is that while there is stock on the market, the options are not as good as they were a year ago. The negative equity properties are not available on the market either. We would have quite a few estates in Ennis that were sold at peak but the people in them cannot sell because they would have to come up with the negative balance before they can sell. That is limiting supply to the market too. It is hard to see where supply is going to come from in 2013, apart maybe from the new insolvency legislation, which may influence the buy-to-let market,” Mr McMahon explained.
According to Mr McMahon, decent-sized family homes in the Ennis area and its suburbs and environs are much in demand and people are finding it difficult to find this type of house in their desired areas.
“Cash buyers are the ones bringing stability to the market right now. I would say cash buyers in Clare represent about half the market. A lot of this is in coastal, second homes in around the €100,000 price range. You would have had a lot of people retiring in the last year or two getting cash lump sums and many of these opted to purchase second homes along the coast at very good prices,” Mr McMahon concluded.