In the latest sign that the Irish property market has turned the corner, house prices in the country have risen for the first month since 2007 in May, although it marked the third consecutive monthly rise for Dublin house prices.
Prices in the whole of Ireland rose 0.2% in the month ending May, and were down just 15.3% on the year. In Dublin, which was the hardest hit by the crisis, price also rose 0.2% on the month in May, and fell 17.5% on the year. Excluding Dublin, prices rose 0.1% on the month and were down 14.2% over the year.
Of course, analysts are quick to question whether this is the market taking a break or the start of the recovery proper.
"It remains to be seen if it is the market taking a break or if it is the end of price falls," said Ronan Lyons, an economist with property website Daft.ie. "It would be a surprise if it was as simple as this," he said.
However, the decline has been falling for the past several months; prices were down 17.8% in the year to end February 2012, this fell to 16.3% in March, hovered at 16.4% in April and of course fell again to the 15.3% we have for May.
Daft.ie also states that price-to-income and price-to-rent ratios show that Irish property is no longer over valued. What's more with prices down over 50% since 2007 when the decline stopped accelerating in February and over 60% in Dublin during the same period, there is an argument to suggest that prices have perhaps fallen as far as they can, especially with the Irish economy having returned to growth – if not all that convincingly.
Economists polled by Reuters earlier this month would seem to disagree; they came out expecting national property prices to fall by 12% in total this year and a further 5% in 2013, citing the continued drag of high unemployment and weak lending on the market.
Unemployment hit a post-crisis high of 14.8% in the first quarter, more than three times the level in 2007. Mortgage lending by Irish banks has fallen 95% since its peak in 2007 and stands at just over one-third of the level seen two years ago, according to the Irish Banking Federation.
"On a practical level it is difficult to see people rushing out to buy a house when labour market conditions remain very fragile," said Alan McQuaid, economist with Merrion Stockbrokers.
"That said, the May house price data are a step in the right direction and suggest the worst may be over."
- Wednesday 27 June 2012