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Property prices drop 3.7% in third quarter as buyers remain jittery

As the latest Daft report is released, economist Ronan Lyons explains why house-hunters are afraid to take the plunge.

THE DAFT REPORT has been released for the third quarter of this year – and shows that asking prices around the country have fallen by an estimated 3.7 per cent in the past three months, bringing the total fall from peak prices in some areas of Dublin to 45 per cent.

Economist Ronan Lyons, who analysed the data for the Daft report, told that the slight downturn in asking prices was not a major cause for concern for homeowners; “It’s – more or less – the same as the previous three reports”.

Lyons said the figures reflect a lack of consumer confidence. “There is a lot of the property for sale but people who should be buying are lacking confidence and finance, and so there are much fewer buyers,” he said.

Lyons added:

Since April two out of five properties have sold [throughout the country]. In Dublin there have been bigger falls from the peak, and one in three put up for sale in April are still on the market. Nationally, there has been a 37 per cent fall from the peak on average, however in Dublin there has been a 40 per cent fall – with some areas experiencing a 45 per cent fall.

But people are no more confident. Now they have to learn about bond yields and bank bailouts and cuts… If, as a house-buyer, you are going to take on a 30-year contract you need to have a degree of confidence.

The report shows that asking prices have fallen by 3.3 per cent in Dublin during the past 3 months, and by about 1.5 per cent in both Cork and Waterford.

In Longford, Kilkenny and Monaghan, asking prices fell by as much as 10 per cent in the third quarter.

With mounting uncertainty over the economy,  Lyons believes that policy-makers can temper shaky confidence by presenting clear strategies – so consumers know exactly where they will stand in years for a reasonable number of years.

There’s a mismatch in supply and demand – and the consumer is lacking confidence and finance. People need to know what the property tax will be for the next three to five years.

If the government doesn’t announce that now, then they’re setting themselves up for failure later down the line. A four-year budget plan, if realistic, will help to provide certainty.

A dip of 37 per cent in the national average asking price for property means the average price fora property is now €195,000. The average time to sell a property is now 8.4 months, down from 9.1 months since the start of 2010 .

Read the full Daft Report here.