The Irish Central Statistics Office revealing 0.2% growth in house prices on the month in May was the most promising in a series of signs that the market may be hitting bottom. Most promising because it was not only the first time since 2007 that prices hadn't fallen, but because the report also recorded the third consecutive month of price growth in Dublin, which has been hardest hit by the crash. Also because the rate of annual decline had been slowing for 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 to 15.3% in May.
Unfortunately any optimism will be hit by the latest CSO data, which shows prices down 1.1% on the month in June, more than reversing May's growth. The report also shows prices down 1% on the month in Dublin, which is even more of a hit as it ends the three month positive run. However, monthly data is widely regarded as being useless when it comes to tracking movements in volatile markets such as we are seeing right now. According to the report the rate of annual decline has continued to slow, down to 14.4%. In Dublin the rate of decline is also slowing, from 17.5% in May, to 16.4% in June.
Ireland has been one of the hardest hit countries in the world by the financial crisis, and its housing market has been at the centre of the misery. When the market appeared to have bottomed the government was praised for its decisive response in setting up the National Asset Management Agency (NAMA), a bad bank to absorb all the toxic debt in the country's banking sector. Time will tell whether the praise was deserved and the latest data is the beginning of a period of bobbling, or indeed whether May's data was simply a fluke against a still negative tide.
- Thursday 26 July 2012