The latest monthly report by Permanent TSB/ESRI on house prices in Ireland was published today. This showed that average house prices in Ireland fell by 0.3% in August, the sixth consecutive month in which house prices fell. Since average house prices peaked in February, the falls each month have been as follows:
When houses prices were falling last Spring, there were widespead predictions that the fall would gather momentum and accelerate in Summer and Autumn. But, its clear this isn't happening. The monthly falls are decreasing and August's fall was the lowest yet. It looks like average house prices will bottom out in the next six months at no more than 5% to 7% below their peak before rising again. This is all the more likely as the ECB left interest rates unchanged today, meaning we are now entering the longest period without an interest rate rise for two years. Add on the increase in mortgage interest tax relief promised for the next budget, and it looks like the turning-point will occur early in the new year. In addition, even at the August rate, the monthly falls are now so small that it becomes scarcely worthwhile for people to hold off buying in the hope of the house they're after being massively cheaper in a year's time. For example, if average house prices fell for the next twelve months at the same rate as in August, they'd only be 3% lower next August than they were this August. Indeed, average prices for some categories of houses have allready started to increase again - the most popular type of house, 3-bedroom semi-detached, have now recorded average price increases across the country for two consecutive months, with a cumulative increase of 2% between June and August. Just to complete a bad day for the doom-mongers, the ISEQ rose today for the seventh consecutive day.