House prices set to drop by €30k as Covid crisis hits sales

HOUSE prices could fall by an average of €30,000 by the end of the year, due to ‘uncertainty’ on the part of buyers over the economy, sparked by the pandemic.

Latest official figures show that prices rose by just 0.1% nationally in the year to June, to an average of just below €287,000.

However, most of those sales were agreed before the full impact of the coronavirus lockdown kicked in and affected the market.

Property experts expect to see price falls next month as the time-lag of around six weeks between sales being agreed and the actual prices paid feeds through to the

Central Statistics Office’s Property Price Index.

Sales are down by 1,123 from 3,391 in June last year to 2,268 in June this year, a fall of 33%.

However, it reflects a 17% increase compared with the 1,937 purchases recorded in May, at the height of the coronavirus lockdown.

Savills’ director of research, John McCartney, said yesterday: ‘I think the June Price Index was too early to see the impact of Covid yet, because of the delays in the computation of the index.

‘The data that came today were from the sales that closed in June, which means they probably went “sale agreed” in February or March.

‘If there was no Covid we would have expected them to hold up at least as well as last year. So we’ve had 33% of our transactions disappear.’

The prices in the latest CSO figures are for June, which reflect deals that were closed and completed in March.

‘In March, there were some people who had gone “sale agreed”, after which you have a period of six weeks or whatever to exchange contracts, and once you’ve exchanged contracts your deposit becomes non-refundable,’ Mr McCartney said.

‘I suspect a significant number of purchasers in that situation pulled back and that’s why we now have reduced transactions in the June figures.

‘However, the ones that proceeded had to because they had got beyond the point of no return; they had paid their full deposit of 10%, they couldn’t get out of it. And not only did they proceed but they proceeded at the full agreed price, and that’s why the pricing impact to me has been pretty modest.’

However, deals made in July, August and September may involve far fewer people who are fully committed. Mr McCartney said: ‘I believe not only will we see fewer transactions, but we will see the transactions happening at a lower price.’ Mr McCartney believes house prices will start to fall over the next three or four months and that by the end of the year prices will be down 5%-10% in Dublin and similar outside the city.

The national average price in June was €286,663.

In the year to June, 42,004 household dwelling purchases were filed with Revenue, with almost a third (13,666) by first-time buyers, while former owner-occupiers bought more than half (22,317), with investors and non-occupiers making up the rest (6,021).

The Revenue data shows there were 804 first-time buyer purchases in June, a fall of 29% on the 1,129 recorded in June last year. Institute of Professional Auctioneers and Valuers chief Pat Davitt said: ‘Despite gloomy predictions about property prices by some commentators, prices are holding up.

‘We expect that to continue. While there may be new variations within areas, arising from how consumers and workers respond to the pandemic, overall we fully expect prices to remain steady.’

Mr Davitt said the concern is what the pandemic and the reaction to it by other stakeholders will do to the supply of properties, which is already well behind demand.

‘Delivery of new homes could drop to 17,000 or fewer this year, at a time when estimated demand is running at about twice that,’ he said.

The Border region was the least expensive in the year to June 2020, with a mean price of €146,282. Leitrim was the least expensive county, with an average price of €118,001.

The average price in Dublin of €440,941 was the highest in any region or county. Dún Laoghaire-Rathdown had the highest average price in the Dublin region at €601,214.

Outside of Dublin, the MidEast – Kildare, Louth, Meath and Wicklow – was the most expensive region, with a mean price of €305,525. Wicklow was the most expensive county in the Mid-East region, with a mean price of €370,789. christian.mccashin@dailymail.ie

‘Supply well behind demand’