Sherry FitzGerald, Ireland's largest estate agents announced today (Monday) that the average price of a second-hand property in Ireland eased back by 1.8% during the third quarter of 2007, with the results for the year to date down by 4.5%. However, if one excludes the Dublin market from the analysis, the figures shows a more moderate price reduction with prices falling by 1.2% during the third quarter and 1.0% in the year to date.
If one examines trends in the Dublin market alone it shows a price reduction of 2.3% in the quarter, bringing the results for the year to date to minus 7.4%. The Cork market shows price reductions 2.1% in the quarter and 2.3% in the year to date.
Commenting on the results Marian Finnegan, Chief Economist, Sherry FitzGerald Group said; "The performance of the property market in the year to date is reflective of the underlying consumer uncertainty. Originating in the furore of stamp duty in the autumn of 2006, this uncertainty was compounded by the rising interest rate environment and the tightening of financial sectors policy in relation to bridging finance. The net effect was a more challenging market place where purchasers and vendors alike were caught in a chain effect unable to sign contracts until their existing property is sold, thereby lengthening the time it takes to sell a property. That said, we remain absolutely confident that the fundamentals underpinning the market remain sound, a factor which will underwrite its performance in the medium term.
Further Ms Finnegan added; “The stock of available second-hand properties is strong, thereby providing a healthy choice of property for potential purchasers. Activity levels have rebounded somewhat with an uplift in internet activity and viewing levels, a factor which bodes well for the demand trends in the coming weeks.”
Although there has been uncertainty in the second-hand market, first time buyer demand remained surprisingly resilient with 34% of all sales bought by the cohort. Investors also remain very active purchasing 17.6% of all second hand properties in the year to date. The continued resilience of investor demand is perhaps reflected in the positive rental inflation in the private rented market - the CPI index of private owned rents rose by over 12% in the twelve months to August 2007.
An analysis of the profile of vendors who sold their property through Sherry FitzGerald in the year to date reveals that 29% of vendors were selling investment properties. Furthermore, approximately 23% of vendors sold with the intention of purchasing a larger property. This is a very healthy indicator of the buoyancy of the economy. Finally approximately 25% of vendors were selling their home to relocate to a different county within Ireland.
Looking to the future Ms Finnegan noted; “The events which began with concerns over lending in the sub prime market in the US have rippled through the world financial and equity markets and are influencing trends in the interest rate environment. The abandonment of the much anticipated interest rate hike in September will have brought some solace to potential purchasers. This combined with an increasingly attractive range of fixed interest rates in the market will serve to tempt more customers back in the mortgage market.
That said we do not anticipate an immediate significant revival in activity or price performance, rather a gradual improvement in market sentiment and demand trends. Overall, the fundamentals underpinning this market remain sound. We have a sound economic base with a young dynamic population operating in a strong European economy, factors which will underwrite the performance of the property market in the medium term.”