Decline in property prices begins to moderate

The decline in property prices in Connaught/Donegal continues, but at a lesser pace than a year ago.

Prices in the Connacht/Donegal region for an urban based, second hand three bed semidetached home declined by 15.7 per cent in 2010 compared to 16.3 per cent in 2009, while a rural, detached three-bed house declined in price by 16.1 per cent last year compared to 20.2 per cent in 2009.

That is according to the Irish Auctioneers and Valuers Institute and Society of Chartered Surveyors Property Survey for 2010.

However, the lack of availability of mortgage finance for qualified buyers is putting further pressure on the property market.

The IAVI and SCS repeated their call for the enactment of the legislation to establish the Property Services Regulatory Authority (PSRA ) on a statutory basis to regulate the industry and to implement the National Property Price Register.

“While property values dropped again in 2010, the pace of decline slowed down compared to 2009 and varies significantly by region,” said acting CEO of the IAVI Edward Carey. “We can no longer rely on average national house price figures, as property values are largely dependent on property type and location, which is clear from the survey results.

“We are now seeing the emergence of a number of ‘micro-property markets’, where the basic fundamentals of desirable location, high quality stock, schools, employment opportunities and transport links are good. Anecdotally, activity in these areas is relatively strong and, as a result, the pace of decline has moderated significantly whereas areas lacking these fundamentals are suffering.

“However, in order to reach a level of stability, the property market requires a fully functioning banking system than can provide mortgage finance to qualified buyers. Despite NAMA having acquired several tranches of loans from financial institutions, the survey results suggest that the availability of mortgage finance to qualified buyers has not improved in 2010 and this is having a crippling effect on the property market,” he said.

The two organisations are urging the incoming government to implement the necessary legislation to ensure that the Property Regulator is given enforcement powers and can regulate on a statutory basis.

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