Reports from both My Home.ie and Daft.ie this week indicate that a two-tier housing market may be emerging in Ireland, with big cities doing better than rural areas.
According to Daft.ie, house prices fell by 18% in 2012, a significantly bigger increase than the 13% fall in 2011. Daft’s figures indicate that the average house price here is €125,000, 54% down from peak levels in 2006. This contrasts with a price fall of just under 3% nationallay.
Ronan Lyons of Daft.ie commented: “The 18% fall in Donegal is as fast a rate of decline as we’ve seen at any point in the last couple of years. It’s also quite a difference from what we’re seeing in different parts of the country, particularly Dublin, where we’re seeing some signs of stablisation, recovery and activity.
“The challenge for Donegal is that there is a lot of supply sitting in the market and dealing with that backlog in an economy with a very weak demand.”
He added: “There is a danger that we will have to two tier property market over the next few year, to the extent where people do want to live nearer cities because they see them as better at creating jobs in a tough economy and so there is demand.”
According to My Home.ie, the median price for a house in Donegal is now €129,000, down 7% from the third quarter of 2012 and down 38.8% from the peak. This contrasts with a national decrease of 51% from the peak.
Caroline Kelleher, an economic consultant writing in My Home.ie’s Property Barometer report, also noted that Dublin is recovering more quickly than rural areas.
“The rate of decline in transaction prices has moderated in 2012, particularly in key urban markets. In Dublin, the median transaction price declined 4.1% annually in Q4 2012 and now stands at €218,250. Similar trends were reported in Limerick and Waterford.
“However, in counties where there is a significant supply overhang, the annual rate of decline has accelerated. In areas with significant supply overhang, the gaps between transaction prices and asking prices are in excess of 100%. Such trends w ould suggest that asking prices in parts of
the country may decline further over the coming months.”