House prices down 30% in four years

HOUSE prices in Clare have dropped more than 30% since the peak in 2006, according to figures from The Daft.ie House Price Report released this week. However, experts in Clare say the prices achieved may have fallen even more.

The average asking price of a house in the county between April and June this year was €201,210, a drop of 31.1% since the same period in 2006.
“People have been saying the peak was in 2007. It wasn’t. We never came out of summer 2006, so we are almost four years into the slow down or crash landing,” said Michael Leyden of Leyden Auctioneers.
“I would say the fall in prices achieved is greater than 30%. It wouldn’t be as high as 50% but it would be between 35% and 40% in general,” he commented.
The Daft report shows the average asking price for one-bedroom homes in Clare is €112,000, two-bedroom homes are averaging at €150,000, three beds at €190,000, four at €269,000 and asking prices for five-bed homes are averaging at €330,000.
According to Mr Leyden, homes under about €250,000 have held their price better than those above it.
Tom Maleady of Location Location Carrig/Maleady in Ennis agrees and says that it is this price range that the majority of sales are coming from at the moment.
“Anything up to about €250,000, the first-time buyer kind of range, is where the movement is now. People are looking for value for money and you can’t blame them. I would say that properties are going sale agreed at about 10% less than the asking price. At the moment, the market is experiencing a period of volatility because there is a certain number of people letting houses go slightly cheaper because of various circumstances but I would expect this to calm down later in the year,” Mr Maleady said. 
According to the Ennis-based estate agent, three years ago a new standard three-bedroom semi-detached house could have made about €260,000 to €270,000, now these have come back to about €170,000 or €180,000 or in some cases less. Older similar-sized houses would be making less. In Ennis, prices are bearing up better than in more rural areas.
“Ennis is the county town. In other counties, there may be two or three similar size towns and the house prices in each of these would be around the same. In the more rural areas of Clare, you are looking at a slightly bigger drop than in Ennis because you don’t have the same footfall or demand in those areas. If you go coastal like Lahinch, I’d say it would be consistent with here in Ennis,” Mr Maleady revealed.
Decreased interest and improved value in the housing market has seen apartment values fall.
“Apartments aren’t as attractive at the moment because of management costs. There isn’t a huge difference between what some people are asking for two-bedroom apartments and older, slightly bigger houses. People are looking at it as better value to buy a three-bedroom semi for maybe €20,000 more than an apartment. It might be as much as 30 years old but it is all about location. If it is in a nice area, close to amenities and more mature, people seem to be going for that instead,” he said.
According to Mr Maleady, it is second-hand properties that are proving most popular and therefore holding their prices better at the moment.
“There is demand for three- and four-bedroom houses, the more I could get the better. People are also being careful about the quality of the build of houses. If it is to a high standard, it will get a good price and location remains a key thing for buyers,” he concluded.
With an office in Lahinch, Leyden Auctioneers has a particular insight into the holiday-home market, which Mr Leyden believes distorts county averages.
“Holiday homes distort things because they are in a completely different market. They would drive the averages up. The big problem with coastal areas now is that you don’t have a willing seller or a willing buyer. The sellers are not willing to drop their prices by the 35% to 40% I am talking about,” Mr Leyden said.
A lack of realism on behalf of vendors and buyers means this market is the “messiest” he has seen during his career.
“Often when we go to do a valuation on a property, you can see immediately the disappointment on people’s faces. You try to bring to bear on them the reality of the market, then they shrug their shoulders and say fine, we’ll do something else with it,” he continued.
“With coastal homes, the market is the messiest market I have experienced in my 35 years in the business. You might have to convince a vendor to drop their asking price by as much as €100,000 or say a quarter of the overall value.
“Then you will have the perspective buyer saying they are interested but putting in an offer way below that again. That is an insult. How do you go to a seller with an offer way below a figure they were already slow to drop to? That is what is messy. It puts the estate agent in an impossible position trying to reconcile the two ideals,” Mr Leyden stated.
While asking prices are continuing to fall in Clare, the Banner County’s decreases are below the national average.
Countrywide, asking prices fell by just over 4% in the second three months of the year, a slightly larger fall than in the first quarter of 2010. The average asking price nationally in the second quarter of 2010 was just over €224,000, 36% below its 2007 peak.
In Munster, the biggest drops between April and June were in Waterford city and Limerick county with falls of over 6%. On average, though, prices have not fallen from the peak as much as in Leinster, where falls were closer to 40% than to 30%.
The total stock of properties for sale across Munster has risen slightly in the last three months and now stands at almost 20,000 again. The typical time it takes to sell a property in Munster is now 10 months, compared to an average of five months during 2008 and eight months in 2009.
Since this time last year, the asking price of homes in Clare has come down by more than 14.3%.
Both Mr Maleady and Mr Leyden agree that the sector is hugely reliant on public confidence and even with the country strictly-speaking out of recession, neither is predicting a significant rise in house prices in the immediate future.
They are both calling for increased realism though among buyers and sellers, adding that while the price a vendor may get for their property may be lower than they expect, it will go further if they are buying a new property.
“The latest Daft.ie supply data show that the total stock of properties for sale is rising again and is now 60,000. This probably reflects a view amongst aspiring sellers that the market may be starting to bottom out and they are now moving to sell.
“Having failed to anticipate the magnitude of the imminent house-price collapse at the beginning of 2007, I am now far from convinced that the market is yet bottoming out. I anticipate that average prices could fall by around 12% this year and completions could be lower than 12,000. Any meaningful recovery in 2011 looks unlikely.
“The housing market is not yet out of the woods, nor is the overall economy. A little progress made, but considerably more to be made,” said Friends First economist, Jim Power.